A local delivery company has purchased a delivery truck for $15,000. The truck will be depreciated under MACRS as a five-year property. The truck's market value (or selling price) is expected to be $2,500 less each year. The O&M costs are expected to be $3.000 per year. The firm is in a 40% tax bracket, and its MARR is 15%. Compute the annual-equivalent cost for retaining the truck for a two-year period, which will be(a) $5,527       (b) $5.J75       (c) $5,362     (d) $5,014

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A:

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A: Computation:

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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.