Mr Ali has an option of investing in one project from the proposed three different projects. Discount rate is 12%. The initial investment and cash flows are given below years Cf – project 1 Cf – project 2 Cf – project 3 0 (10,000) (28,000) (22,000) 1 1000 3000 4000 2 880 7000 1000 3 6000 8000 1000 4 4000 12000 9000 5 2000 7500 11500 6 3650 6400 8900   a. Calculate payback for all three projects​​​​​ b. Calculate discounted payback for all three projects​​​ c. Calculate NPV for all three projects​​​​​ d. Calculate profitability index for all three projects​​​ e. Calculate IRR for all three projects​​​​​ f. Write a detailed comment on which project Mr Ali must invest on the basis of above calculated criteria’s and why he must ignore the other projects.

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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.