What is budget? Discuss some major benefits to be gained from budgeting.

ABC Company Ltd. is faced with the problem of replacing a machine. Two machines are available in the market. Both require initial outlay of Tk. 10,000 and have a life of 5 years. The company required rate of return is 10% and pays tax @ 50%. Depreciation and investment allowances are as follows :

Depreciation : 1st year 80% of cost and 2nd year 20% of cost.

Investment allowance : 1st year 20% of cost. Cash inflows are as follows (before tax) :

Determine :