Purchase Solution

Depreciation of new processing line for capital budgeting

Not what you're looking for?

Ask Custom Question

X Company 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?

Purchase this Solution
Solution Summary

The response discusses depreciation of new processing line for capital budgeting purposes.

Solution Preview

Annual depreciation expenses of the processing line for capital budgeting purposes

=(Cost of the ...

Purchase this Solution
Free BrainMass Quizzes
IPOs

This Quiz is compiled of questions that pertain to IPOs (Initial Public Offerings)

Learning Lean

This quiz will help you understand the basic concepts of Lean.

Accounting: Statement of Cash flows

This quiz tests your knowledge of the components of the statements of cash flows and the methods used to determine cash flows.

Introduction to Finance

This quiz test introductory finance topics.

Organizational Behavior (OB)

The organizational behavior (OB) quiz will help you better understand organizational behavior through the lens of managers including workforce diversity.

View More Free Quizzes
Related BrainMass Solutions

  • Zinc Inc.'s Depreciation Expense

    What will be the annual depreciation expense of the processing line for capital budgeting process?

  • Net Cash Flow

    Compute the firm's annual net cash flows (NCF) for capital budgeting purposes for the next 10 years, assuming that the new processing unit is purchased.

  • Capital budgeting

    333226 Depreciation in capital budgeting; Rowell Company's new building 1. Which of the following statements is CORRECT? a. Because depreciation is not a cash expense, it plays no role in capital budgeting. b.

  • Operating Cash Flows

    Under straight- line depreciation, the cost of the equipment would be depreciated evenly over its 4- year life ( ignore the half- year convention for the straight-line method).

  • Capital Budgeting and Depreciation Methods

    Phyllis believes that the firm should use straight-line depreciation for a capital project, because it results in higher net income during the early years of the project's life.

  • Decision regarding purchase of new machine

    Compute the firm's annual net cash flows (NCF) for capital budgeting purposes for the next 10 years, assuming that the new processing unit is purchased. Please see the attached file.

  • Calculate NPV, IRR for project; evaluate a capital budgeting

    Comprehensive Capital Budgeting Problem You are asked to evaluate a new product line to replace an existing product that is at the end of its product life cycle.

  • Calculating cash flows, after-tax salvage value, NPV and IRR

    The new line would generate incremental sales of 1,250 units per year for four years at an incremental cost of $100 per unit in the first year, excluding depreciation. Each unit can be sold for $200 in the first year.

  • Presentation on Capital Budgeting

    Use the following assumptions: Assume the risk-adjusted cost of capital is 12%, compute net present value (NPV) for each proposal. Include the cash flows from salvage value and the tax benefits of depreciation (assume 5-year straight-line).

View More Related Solutions