payout is 40 percent? SECTION-D (Compulsory) (115=15) 15. A company is considering two mutually exclusive projects. Both require an  initial cash outlay of Rs.20000 each, and have a life of five years. The  company’s required rate of return is 10% and pays tax at a 35% rate. The  projects with be depreciated on a straight – line basis. The before taxes cash  flows expected to be generated by the projects are as follows. Before-tax cash  flows (Rs.) Project1 2 3 4 5 A 8000 8000 8000 8000 8000B 12000 6000 4000  10000 10000 calcualte for each project: The NPV and the internal rate of  return. Which project should be accepted 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.