Suppose that you want to buy an equipment for their plant. The following two options are available (see below). If the price of electricity is 0.6 OR/kW-hr and the Ac's are expected to work 4320 hr/yE, which A/C do you recommend to buy if MARR is 16%. Use PW method Offer B 55,000 Offer A 50,000 Investment Power consumption (kW) Annual revenues 1.6 1.2 19,000 19,400 (RO/year) Life time (yr) Salvage value (RO) 8. 8. 2,000 1,300

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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.