B Company is considering two alternative ways to depreciate a proposed investment. The investment has an initial cost of P100,000 and an expected five-year life. The two alternative depreciation schedules follow:     Method 1 Method 2 Year 1 depreciation P20,000 P40,000 Year 2 depreciation P20,000 P30,000 Year 3 depreciation P20,000 P20,000 Year 4 depreciation P20,000 P10,000 Year 5 depreciation P20,000      P0       Assuming that the company faces a marginal tax rate of 40 percent and has a cost of capital of 10 percent, what is the difference between the two methods in the present value of the depreciation tax benefit?

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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.