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Zinc Inc.'s Depreciation Expense

Zinc inc. is considering the acquisition of a new processing line. The processor can be purchased for $3,750,000. 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. Studies have shown that employee training expenses will be $125,000. What will be the annual depreciation expense of the processing line for capital budgeting process?

A) $375,000

B) 419, 025

C) 390, 000

D) 400, 025

Which of the following should NOT be included as investment costs in evaluating a capital asset?

A) interest payments and other financing cash flows that result from raising funds to finance a project.

B) Employee training expenses

C) Shipping expenses

D) Installation expenses

Solution Preview

Zinc inc. is considering the acquisition of a new processing line. The processor can be purchased for $3,750,000. 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 ...

Solution Summary

The solution shows the correct answer for the depreciation expense for Zinc Inc. and the correct answer for the multiple choice question regarding capital assets.

$2.19