The Oklahoma City Zoo has proposed adding to their Web site a major segment providing a virtual tour of the grounds and animals, suitable for both routine enjoyment and educational purposes in classrooms. Survey data indicate that this will have either a neutral or positive effect upon actual zoo attendance. The Web site will be professionally done and have an initial cost of $345,000. Upkeep, refreshing the videos, and developing videos for scientific research and entertainment will cost another $81,000 per year. The zoo is expected to be in operation for an indefinite period; however, a study period of only 10 years for the Web site is to be assumed, with only a residual (salvage) value of $65,000 for the archival value being anticipated. Interest is 6%. An estimated 120,000 persons will visit the e-zoo in the first year, increasing by 29,500 each year, and they will receive, on the average, an additional $0.70 of benefit per visit when the new area is complete. Calculate benefit-cost ratio and benefits minus costs.

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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.