An investment of P10,000 can be made in project that will produce a uniform annual revenue of P6310 for five years and then have a salvage value of P2000. Annual expenses will P3000 each year. The company is willing to accept any project that will earn 10% per year or more on all investment capital. Show whether this is desirable investment. Solve the Problem using annual cost method.

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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.