Zinc,Inc.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

To calculate the total investment in the processing line for capital budgeting purposes, we need to add up all the costs associated with the acquisition and installation of the processor. 
Therefore, the total investment is:

Purchase price of processor + Shipping costs + Installation costs + Feasibility study costs + Employee-training expenses 
= $4,550,000 + $65,000 + $190,500 + $45,000 + $150,000 
= $4,955,500

Therefore, option C is the correct answer.

Zinc,IncIs Considering the Acquisition of a New Processing Line