Multiple Choice
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 firm's current fixed costs are $9,000 and current marginal costs are $15.The firm currently charges $18 per unit.If the interest rate is 5% then the present value of the cash flows is
A) $6,020.41
B) $51,020.41
C) -$7,380.95
D) $10,000
Correct Answer:
Verified
Correct Answer:
Verified
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