Emerson Electric is considering the purchase of equipment that will allow the company to manufacture a new line of wireless devices for homeappliance control. The first cost will be $80,000, and the life is estimated at 6 years with a salvage value of $10,000. Three different salespeople have provided estimates regarding the added revenue the equipment will generate. Salespersons 1, 2, and 3 have made estimates of $10,000, $16,000, and $18,000 per year, respectively. If the company’s MARR is 8% per year, use a PWbased relation to determine if these different estimates will change the decision to purchase the equipment.

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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.