The following information relates to two capital investment projects - Project A and Project B: Initial investment of both projects = $400,000 Useful life = 4 years Estimate cost of capital = 16% Scrap value of both projects = $0 Straight-line method of depreciation is used   The estimated net profits of Project A over its useful life: Year Amount 1 $70,000 2 $50,000 3 $100,000 4 $30,000   Project B is expected to generate net cash flows of $140,000 per year over the four year period.   Calculate payback period of both projects

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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.