An engineer is working on the layout of a new research and experimentation facility.  Two plant operators will be required.  If, however, an additional $150,000 of instrumentation and remote controls were added, the plant could be run by a single operator.  The total before-tax cost of each plant operator is projected to be $52,500 per year.  The instrumentation and controls will be depreciated using the MACRS 5-year depreciation schedule. (a)  Find the rate of return on the project, and the after tax payback period. (b)  Based on a MARR of 15%, is this a desirable 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.