​Use the Following Setup for Question

question 6

Multiple Choice

​Use the following setup for question
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 cost are $15.The firm currently charges $18 per unit.
-​If the cost of capital is 5% then the net present value of the investment is

• A)​$6,020.41
• B)$7,380.95
• C)-$7,380.95
• D)​$10,000

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Definitions:

Bureaucracy

A system of administration characterized by strict policies, procedures, and hierarchy, often within large organizations.

Organic Organisation

A type of organizational structure that is more flexible and adaptable, characterized by less formalization, wide spans of control, and decentralized decision-making.

Legitimate Authority

The right to lead or command, based on a recognized and accepted position of power within social, legal, or organizational structures.

Scientific Management

A management theory that emphasizes optimizing efficiency through systematic study and analysis of work processes.