$500,000 capital investment proposal has an estimated life of four years and no residual value. The minimum desired rate of return for net present value analysis is 12%.  The estimated net cash flows  and the present value of $1 at compound interest of 12% for 1, 2, 3, and 4 years are as follows:   Year Net Cash Flow Present Valueof $1 at 12% 1 $300,000  .893 2 260,000 .797 3 $208,000  .712 4 180,000 .636 Determine the net present value.

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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.