The Acme Widget Company is considering two mutually exclusive projects with the following after-tax net cash flows:                                                                           Project A                    Project B             Initial Outlay                                       -$50,000                      -$50,000             Inflow year 1                                          32,000                         14,000             Inflow year 2                                          32,000                         14,000             Inflow year 3                                                                              14,000             Inflow year 4                                                                              14,000             Inflow year 5                                                                              14,000             Inflow year 6                                                                              14,000   Project A has an expected life of two years and Project B has an expected life of six years. Assume a required rate of return of 10 percent.   Calculate each project’s net present value.  Are these projects comparable? Why or why not?  Compare these projects using the replacement chain and equivalent annual annuity techniques. Which project should be selected? Support your recommendation

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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.