How analyzed the capital budget.

PRACTICE:

1. Prepare the statement with the following data:

Sales revenue	300,000
Less: cost and expenses Manufacturing cost Depreciation Selling and administrative expenses	89,000 27,600 18,980
Income before income taxes
Income tax expense	8,800
Net income

2. Prepare the statement with the following data: 

Sales revenue	273,000
Less: cost and expenses Manufacturing cost Depreciation Selling and administrative expenses	98,000 28,600 28,980
Income before income taxes
Income tax expense	12,800
Net income

23,900 / 6,700 = 28%

1. Do the calculation in order to get Annual rate of Return

Net income	Average investment	Annual Rate of Return
125,000	12.789
156,000	13,890
178,000	16,900
200,000	23,789