A small company has P20,000 in surplus capital that it wishes to invest in new revenue producing projects. Three independent sets of mutually exclusive projects have been developed. The useful life of each is five years and all market values are zero. You have been asked to perform an IRR analysis to select the best combination of projects. If the MARR is 12% per year, which combination of projects would you recommend? Project Capital investment (P) Net annual benefits (P) Mutually exclusive A1 5,000 1,500 A2 7,000 1,800 Mutually exclusive B1 12,000 2,000 B2 18,000 4,000 Mutually exclusive C1 14,000 4,000 C2 18,000 4,500

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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.