3). A company is considering the purchase of a machine for $150,000. It is expected useful life of five years. The plant manager estimates the following savings in cash operating costs:              Year                      Cash Savings                                  $10,000                                    20,000                                    30,000                                    40,000                                    50,000                        Total:             $150,000 The company uses a required rate of return of 10% in its capital budgeting decisions.           Calculate the followings: Net present value Payback period Accounting Rate of return.          Note: 10% discount factor Table A-3 Year PV of 10% Discount Factor 1 0.9091 2 0.8264 3 0.7513 4 0.6830 5 0.6209

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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.