Six years ago, Neighborhood Hardware paid a contractor $63,000 to expand the store. At that time, the company calculated a net present value of about $7,800 for the expansion. Now, the company believes that the investment increased annual cash inflows by $9,800 per year for each of the six years. The company has a desired rate of return of 14%. Ignoring income tax considerations, what was the net present value actually achieved for this capital investment?

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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.