An equipment’s cost is P50,000 with an economic life of 10 years. The equipment can be sold at P5,000 after 10 years. At what price can the equipment be sold after 5 years. (a) Using Straight line Method. (b) Using Sum of the years digit method. (c) Using Double Declining Balance Method (d) Using Declining Balance Method (e) Using Sinking Fund at 5%.

Q: An instrument requires recalibration once every five years at a his expense, assuming i = 5%.

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A: The payback period is calculated as the length of time taken to recover the initial cost.

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A:

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Q: e. Based on the NPV calculations, what would be the equipment's internal rate of return?

A: IRR refers to internal rate of return. It is the rate at which NPV is nil.

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.