A start-up biotech company is considering making an investment of $100,000 in a new filtration system. The associated estimates are summarized below: Annual receipts             $75,000 Annual expenses           $45,000 Useful life                      8 years Salvage value                $20,000 Straight line depreciation will be used, and the effective income tax rate is 20%. The MARR is 15% per year. Determine whether this investment is an attractive option for the company.

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Q: what is the present worth of this investment?

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Q: Determine whether this investment is an attractive option for the company.

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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.