A new equipment is being considered to replace an old equipment in a facility. The equipment would cost $7,480 and it would require a special maintenance at year 10 of the life expectancy of the equipment, which is of 15 years (also life of the project). The new equipment will generate savings in the order of $1,000 per year. If a discount rate of 6% is used what is the maximum cost of the maintenance at year 10 to make the project to be considered as a feasible option?

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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.