osal to his boss. The business uses ARR to assess investment proposals using a minimum 'hurdle' rate of 27 per cent. Details of the proposal were: Cost of equipment £200,000. Estimated residual value of equipment £40,000. Average annual operating profit before depreciation £48,000

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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.