A cloth manufacturing firm is deciding whether or not to invest in new machinery. The machinery costs $45,000 and is expected to crease 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 curren marginal cost are S15. The firm currently charges $18 per unit. the interest is 5%, should the firm undertake the investment? O a. Yes, since NPV=0 O b. Yes, since NPV<0 Oc. Yes, since NPV>0 O d. No, since NPV=0

A cloth manufacturing firm is deciding whether or not to invest in new machinery. The machinery costs $45,000 and is expected to crease 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 curren marginal cost are S15. The firm currently charges $18 per unit. the interest is 5%, should the firm undertake the investment? O a. Yes, since NPV=0 O b. Yes, since NPV<0 Oc. Yes, since NPV>0 O d. No, since NPV=0

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter1: Introduction And Goals Of The Firm

Section: Chapter Questions

Problem 2.2CE

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