Business

Micah Cobb

4 March, 10:50

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. - 7380.95

d 10,000

+3

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