Two projects, Y and Z, have the following cash flows:   Year Project Y Project Z 0 -500 -1700 1 400 700 2 250 800 3 150 950       Project Y and Project Z are mutually exclusive. The discount rate is 8%. Which of the following is not true?   a. NPV of Project Z is 388.16.   b. The PI (profitability index) of Project Y is higher than the PI of Project Z.   c. Because the PI of Project Y is higher than that of Project Z, Project Y should be chosen.   d. The payback period of Project Y is less than 2 years.   e. The payback period for Project Z is longer than that of Project Y.

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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.