A retrofitted space-heating system is being considered for a small office building. the $110,000 retrofitted space-heating system was projected to save $30,000 per year in electrical power and be worth $8,000 at the end of the six-year study period. Use the FW method to determine whether the project is still economically justified if the system has zero market value after six years. The MARR is 15% per year.

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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.