An investment of $1,400,000 is made in 5-year MACRS-GDS equipment. Measured in constant dollars, the investment yields annual returns of $400,000 and a salvage value of $500,000 at the end of the 7-year planninghorizon. A 25% tax rate and a 3% inflation rate apply. The real after-taxminimum attractive rate of return is 8%. For the investment, calculate a. After-tax present worth, b. After-tax annual worth measured in then-current dollars,c. Real internal rate of return, and d. EVA measured in then-current dollars.

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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.