A company is considering an investment proposal to install new milling controls. The project will cost Kshs 50,000,000. The facility has a life expectancy of five years and no salvage value. The company’s tax rate is 40%.  The estimated cash flows from the proposed investment proposal are as follows: Year                             CF Kshs 000 1                                           13,000 2                                           14,000 3                                           18,000 4                                           23,000 5                                           25,000 Compute: Accounting Rate of Return Discounted payback period at 6% discounting factor  Net present value at 15% discounting factor and advise management on the project’s feasibility

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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.