To increase production, an engineer is considering the purchase of a new machine. The machine costs P350 000.00 and will have a salvage value of P10 000.00 at the end of eight years. Operating and maintenance cost is expected to be P4000.00 per year. With this machine. Annual revenue is expected to increase by P85 000.00. Using future worth analysis and a 15% rate of return, determine if the purchase should be recommended. (Ans. FT = P51 214.34 ) -PLEASE USE AN ACTUAL FORMULA NOT AN EXCEL

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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.