Fintech is contemplating two different projects and decides to perform a financial analysis to determine which is more financially lucrative. Project A and B have the cash flows as shown below. Fintech requires a rate of return of 10% and an inflation rate of 4%. Compute the payback in years and the net present value (NPV) for both projects and offer advice as to the best course of action. Year €250,000 €400,000 1 €75,000 €125,000 €155,000 €230,000 3 €200,000 €288,000 €175,000 €265,000 €160,000 €225,000

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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.