Mrs. Alis is an intelligent business woman. She makes her investments after a very thoughtful process. In January 2018 , her manager has shown her some projects with the following details Option A Investment into a towel business that initially cost $200,000 and then will generate cash inflow of $24000 per year for the next 10 years Option B Investment into a detergent business that initially cost $190,000 and then will generate cash inflow of $20,000 for each of next 12 years. The rate of return associated with both the investments is 12%. Calculate net present value (NPV) and internal rate of return (IRR) of both the investments. Comment on which investment Mrs Alis should pick on the basis NPV and IRR.
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Capital budgeting
Mrs. Alis is an intelligent business woman. She makes her investments after a very thoughtful process. In January 2018 , her manager has shown her some projects with the following details
Option A
Investment into a towel business that initially cost $200,000 and then will generate
Option B
Investment into a detergent business that initially cost $190,000 and then will generate cash inflow of $20,000 for each of next 12 years.
The
- Calculate
net present value (NPV) andinternal rate of return (IRR) of both the investments. - Comment on which investment Mrs Alis should pick on the basis NPV and IRR.
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