Alloy Corp.is considering the acquisition of a new processing line.The processor can be purchased for $4,550,000.It will cost $65,000 to ship and $190,500 to install the processor.A recently completed feasibility study that was performed at a cost of $45,000 indicated that the processor would produce a positive NPV.Studies have shown that employee-training expenses will be $150,000.What is the total investment in the processing line for capital budgeting purposes?

Question

Quizplus · Accepted Answer

The total investment in the processing line includes the purchase price, shipping cost, installation cost, feasibility study cost, and employee-training expenses. Therefore, the total investment is calculated as follows:
$4,550,000 + $65,000 + $190,500 + $45,000 + $150,000 = $4,955,500. Therefore, the correct choice is (C).