Machine cost = $15,000; Life = 8 years; salvage value = $3000. What minimum cash return would the investor demand annually from the operation of this machine if he desires interest annually at the rate of 8% in his investment and accumulates a capital replacement fund by investing annual deposits at 5%?

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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.