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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.
-Ricky is thinking about borrowing $10,000 from Fred.He promises Fred cash flows of $5000 for the next three years.If Fred's cost of capital is 10%,what is the Net Present Value of the investment for Fred?
Writing Requirement
A legal principle that certain kinds of contracts or agreements must be recorded in written form to be legally binding and enforceable.
Confirming Memo
A written document used to reiterate agreements or transactions that have been verbally made, ensuring both parties share the same understanding.
Delivery Contract
A delivery contract is a legal agreement specifying the terms under which goods are to be transferred from a seller to a buyer.
Common Carrier
A business or agency that is available to the public for transportation of persons, goods, or services under a regulatory or legal obligation.
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