FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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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 budge…
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1. A company is planning to expand its present business activity. It has two alternatives for the expansion program and the corresponding cash flows are tabulated below. Each alternative has a life of five years and a negligible salvage value. The minimum attractive rate of return for the company is 12%. Suggest the best alternative to the company. | Alternative | Initial Investment (PhP) | Yearly Revenue (PhP) | |-------------|--------------------------|----------------------| | 1 | 500,000 | 170,000 | | 2 | 800,000 | 270,000 |
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Transcribed Image Text:1. A company is planning to expand its present business activity. It has two alternatives for the expansion program and the corresponding cash flows are tabulated below. Each alternative has a life of five years and a negligible salvage value. The minimum attractive rate of return for the company is 12%. Suggest the best alternative to the company. | Alternative | Initial Investment (PhP) | Yearly Revenue (PhP) | |-------------|--------------------------|----------------------| | 1 | 500,000 | 170,000 | | 2 | 800,000 | 270,000 |
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