Zinc, Inc. Is considering the acquisition of a new processing line. The processo
ID: 2666958 • Letter: Z
Question
Zinc, Inc. Is considering the acquisition of a new processing line. The processor can be purchase for $3,750,000; it will have a 10 year useful life. It will cost $165,000 to ship and $85,250 to install the processor. A recently completed feasibility study that was performed at a cost of $65,000 indicated that the processor would produce a positive NPV. The processor will be depreciated using the straight line method to zero expected salvage value. ?Studies have shown that employee-training expenses will be $ 125,000. What will be the annual depreciation expenses of the processing line for capital budgeting purposes?$375,000
$419,025
$390,000
$400,025
Explanation / Answer
Zinc, Inc. Is considering the acquisition of a new processing line. The processor can be purchase for $3,750,000; it will have a 10 year useful life. It will cost $165,000 to ship and $85,250 to install the processor. A recently completed feasibility study that was performed at a cost of $65,000 indicated that the processor would produce a positive NPV. The processor will be depreciated using the straight line method to zero expected salvage value. ?Studies have shown that employee-training expenses will be $ 125,000. What will be the annual depreciation expenses of the processing line for capital budgeting purposes?
1. FULL COST = shipping + cost + install + train employees + the study = 3,750,000 + 165,000 + 85,250 + 125,000 + 65,000 = $4 190 250
Divided by 10 years of life =
$419,025
$375,000
$419,025
$390,000
$400,025
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