IRR factor: Initial investment / Annual net cash flow = RM 253,000 / RM 282,050 = 0.90 From the annuity table, this factor corresponds to 2% discount rate which produces the same value which means that at this rate, the present value of cash flows equal the initial investment. So, the IRR is 2% Machine RMR: IRR factor: Initial investment / Annual net cash flow = RM 195,000 / RM 321,120 = 0.61 From the annuity table, this factor corresponds to 10% discount rate which produces the same value which means that at this rate, the present value of cash flows equal the initial investment. So, the IRR is 10% Which IRR is better

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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.