10 kW home wind turbine is being planned for acquisition and installation at a cost of $65,000. During its useful life it is expected to generate an annual gross income of $8000. The cost to house the machine is $100 per year. Its maintenance cost is projected to be $500 per year. Draw a cash flow diagram, determine the payback period for the machine, and indicate this payback period on the CFD.

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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.