Compute Discounted Payback Period, Net Present Value and Profitability Index of a project which costs Rs 50,000, cost of capital is 8% and is expected to generate following cash inflows: Year Cash inflows(Rs) 1 12,000 2 15,000 3 25,000 4 28,000 5 20,000 6 22,000 On the basis of Net Present Value and Profitability Index, suggest if the project is to be accepted or not.

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A: Profitability Index is computed as follows:-Profitability Index =

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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.