Two projects being considered by a firm are mutually exclusive and have the following projected cash flows:   Year  Project 1 Cash Flow     Project 2 Cash flow Year Project 1 Cash Flow Project 2 Cash Flow 0                −$4.0                                     ? 1                  $3.0                                 $1.7 2                  $5.0                                 $3.2 3                  $2.0                                 $5.8   The crossover rate of the two projects’ NPV profiles is 9%. What is the initial cash flow for Project 2? (Hint: The crossover rate is the rate at which the NPV for two projects is the same.)

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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.