Project L has cash flows of -$900 at time zero; $490 at time 1; $410 at time 2; $490 at time 3. Use WACC of 7%.  Project K has original cost of -$2,000 at time zero; $300 at time 1; $ 850 at time 2: $700 at time 3; $1,200 at time 4. Use WACC of 7%. Find payback period for both projects  Find NPV for both projects If the company favors projects with shorter paybacks, how much NPV will be forgone?

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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.