Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

A clothing manufacturing firm is deciding whether to invest in a new technology that needs an initial investment of $45,000. This will increase cash flows

A clothing manufacturing firm is deciding whether to invest in a new technology that needs an initial investment of $45,000. This will increase cash flows in the first year by $25,000 and $30,000 in the second year. The firm's current fixed costs are $9,000 and marginal cost is $15. The firm currently charges $18 per unit. If the interest rate is 15% then What is the net present value of these cash flows ?

  1.  

  2.  

Step by Step Solution

There are 3 Steps involved in it

Step: 1

To calculate the net present value NPV of the cash flows we need to discount the future cash flows t... blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Principles of managerial finance

Authors: Lawrence J Gitman, Chad J Zutter

12th edition

9780321524133, 132479540, 321524136, 978-0132479547

More Books

Students also viewed these Accounting questions

Question

Briefly explain the criteria for make and buy. AppendixLO1

Answered: 1 week ago

Question

Briefly explain the steps in product design. AppendixLO1

Answered: 1 week ago