rg Pvt. Ltd. is considering two mutually exclusive capital investments. The project’s expected net cash flows are as follows: Expected Cash Flows Year Project A Project B 0 -400 -575 1 95 150 2 110 200 3 118 250 4 125 275 5 140 230 6 150 180 What is the profitability index for each project if the cost of capital is 12%?

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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.