Alloy Corp.is considering the acquisition of a new processing line.The processor can be purchased 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 expense of the processing line for capital budgeting purposes?

Question

Quizplus · Accepted Answer

The Answer of Alloy Corp.is considering the acquisition of a new processing line.The processor can be purchased 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 expense of the processing line for capital budgeting purposes?