Assume that it costs $1,000 to start a project.  If the project will give $400 profit in the first year, $500 in the second year and $300 in the third year. find the payback period.  Now assume that the interest rate is 10%, find the net present value (NPV) and the profitability index (PI) for this project

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A:

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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.