manufacturing plant produces 5,000 units per year. The capital investment, annual expenses, salvage value, and reject rate are as follows: Capital investment $ 100,000 Useful life (years) 7 Annual expenses $ 15,000 Salvage value $ 7000 Reject rate 8.5% Non-defective units can be sold for $5 per unit and defective units can be sold for $1 per unit. The MARR = 9%. Use at least 3 decimal places for each factor. A- Find the PW for this project? B- Determine how sensitive the decision to invest in this project to the estimates of initial investment and salvage value?

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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.