A company is considering a small project that requires an immediate investment of £120,000. Net income from the project is expected to be £20,000 per annum received continuously over the next twelve years. (a)Calculate the net present value of the investment at an effective rate of interest of 7% per annum. (b)Calculate the discounted payback period for the project at an effective rate of interest of 7% per annum.

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Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.