Lipsion Ltd company is thinking about investing in one of two potential new products for sale. The projections are as follows: year    revenue/ product s     revenue/ product v 0              (150,000) outlay              (150000) outlay 1                     14000                                  15000 2                      24000                                  25333 3                      44000                                  52000 4                       84000                               63333                                                                                                             Calculate NPV of both products (to 1 d.p.) assuming a discount rate of 7%. Then decide which product should be selected and why ?

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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.