A company decides to purchase an industrial gas turbine which costs forty thousand. Additional costs of 14,000 incurred for shipping, insurance, site preparation, fuel lines, and fuel storage tanks. The turbine has an AOC of 450 plus fuel expense of 7.50/hour. The new model is claimed to use less resources which led to an annual savings of 45000. If the engine is set to operate for 3000 hours per year, what is the annual equivalent life-cycle cost of the gas turbine given that the MARR = 15%. Cost of dismantling and disposing of the turbine at the end of its 8-year life is 8,000?

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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.