Answered step by step
Verified Expert Solution
Question
1 Approved Answer
A cloth manufacturing firm is deciding whether or not to invest in new machinery. The machinery costs $45,000 and is expected to increase cash flows
A cloth manufacturing firm is deciding whether or not to invest in new machinery. The machinery costs $45,000 and is expected to increase cash flows in the first year by $25,000 and in the second year by $30,000. The firms current fixed costs are $9,000 and the current marginal cost is $15. The firm currently charges $18 per unit. If the interest is 5%, should the firm undertake the investment? a. Yes, since NPV<0 b. no, since npv c. yes,>0 d. Yes, since NPV=0
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started