An entrepreneur is offered a service contract that will cost him $700,000 initially. The contract has a 5 years of life and will generate an after tax cash inflow of $180,000 per year. The cost of capital of this project is 12%. What’s the NPV of the project? Should the entrepreneur accept the contract? Group of answer choices $51,140; accept $68,418; accept $648,860; reject -$48,524; reject -$51,140; reject

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A:

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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.