Show complete solution.  4. Atty. Gacayan invested P280, 000 which will be used in a project that will produce a uniform annual revenue of P180,000 for 5 years and then have a salvage value of 16% of the investment. Out-of-pocket costs for operation and maintenance will be P80,000 per year. Taxes and insurance will be 3% of the first cost per year. Atty Gacayan expects capital to earn not less than 30% before income taxes. Determine if the investment is good and Calculate the following: a. Calculate using Rate of Return Method. b. Payback period of the investment. c. Present worth of the net cash flow.

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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.