An existing machine in a factory has an annual maintenance cost of P40,000. A new and more efficient machine will require an investment of P90,000 and is estimated to have salvage value of P30,000 at the end of 8 years. Its annual expenses for maintenance and upkeep etc. is total of P 22,000. if the company expects to earn 12% on its investment, will it be worthwhile to purchase the new machine using the present worth. Use PW Method

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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.