The chief financial officer (CFO) of New Age Fashion Ltd. has just received a request from a project manager to authorize an expenditure in the amount of £45,000. The manager states that this...

Extracted text: Question 4, Warm-Up 1-4 (static) > The chief financial officer (CFO) of New Age Fashion Ltd. has just received a request from a project manager to authorize an expenditure in the amount of £45,000. The manager states that this expenditure is necessary for the last stage development of a space navigation system, which is based on a programming language called Xtor. As a space engineer and financial manager, you know that Xtor is almost obsolete and is being replaced by alternatives that provide better cross-platform compatibility. However, the project manager insists that they should continue with the last tranche of payment because over £1.5 million has already been spent on developing this navigation system. It would be a shame to waste all the time and resources that have been invested. Advise the CFO regarding whether she should authorize the £45,000 proposed expenditure. Use marginal cost-benefit analysis to explain your reasoning. Which of the following statements correctly describes your decision? A. The CFO should authorize the £45,000 expenditure to continue the project because the marginal cost-benefit analysis treats the £1.5 million as part of the project's initial capital outlay that can be recovered only if the project is implemented. B. The CFO should not authorize the £45,000 expenditure to continue the project even if the project will generate a positive net present value. The marginal cost-benefit analysis treats the £1.5 million as a cost that is extremely unlikely to be recovered and the £45,000 expenditure will also become a cost unlikely to be recovered. OC. The CFO should authorize the £45,000 expenditure to continue the project if the project will generate a positive net present value. The marginal cost-benefit analysis treats the £1.5 million as a cost that is irrelevant to the current decision making. O D. The CFO should not authorize the £45,000 expenditure to continue the project because it is surpassed by the new technology. Though the marginal cost-benefit analysis treats the £1.5 million as a cost that is irrelevant to the current decision making, continuing the project would be inadvisable even if the £45,000 expenditure generates a positive net present value.