What is the net investment for an extruder that costs $42,000, if shipping costs are $1,500 and installation is $4,800? Assume this efficient machine is replacing an older extruder with a book and market value of zero. The replacement investment will reduce operating costs by $6,600 a year.
A) $48,300
B) $54,900
C) $43,500
D) $51,000

Question

Quizplus · Accepted Answer

The net investment is calculated by adding the cost of the new extruder ($42,000), shipping costs ($1,500), and installation costs ($4,800), which totals $48,300. The reduction in operating costs and the value of the old extruder are not included in the calculation of net investment.

What Is the Net Investment for an Extruder That Costs