McMillan Company manufactures electronic flow sensors that are designed as an alternative to balland- tube rotometers. The company recently spent $3 million to increase the capacity of an existing production line. If the extra revenue generated by the expansion amounts to $200,000 per month, how long will it take for the company to recover its investment at an interest rate of 12% per year, compounded monthly? Solve using (a) tabulated factors and (b) a spreadsheet or calculator.

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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.