An investment of RM20,000 can be made in a project that will produce a uniform annual revenue of RM7,310 for seven years and then have a market (salvage) value of RM6,000. Expenses will be RM3,100 in second year and RM2,000 in third year. Second investment of RM4, 000 in fifth years was made to increase the project operation. The company is willing to accept any project that will earn 10% per year or more before incomes taxes, on all invested capital. Show whether this is desirable investment by using the Present Worth 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.