Assume a $200,000 investment and the following cash flows for two alternative capital projects: Year Project A Project B 1 $60,000 $40,000 2 90,000 70,000 3 50,000 80,000 4 40,000 20,000  a. Calculate the payback period for each project b. Using the payback method, if the projects are mutually exclusive, which project would you select and why? c. If the year four cash flows were $100,000 for Project A and $500,000 for project b, would your decision change under the payback method? Why or why not?

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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.