ABC already spent $85,000 on a feasibility study for a machine that will produce a new product.The machine will cost $2,575,000.Required modifications will cost $375,000.ABC will need to invest $75,000 for additional inventory.The machine has an IRS approved useful life of 7 years;it is presumed to have no salvage value.It will only be operated for 3 years,after which it will be sold for $600,000.What is the total investment amount required for the machine?
A)$3,025,000
B)$2,950,000
C)$2,575,000
D)$2,350,000

Question

Quizplus · Accepted Answer

The total investment amount required for the machine is $3,025,000. This includes the cost of the machine ($2,575,000), the cost of required modifications ($375,000), the cost of additional inventory ($75,000), and the cost of the feasibility study ($85,000).

ABC Already Spent $85,000 on a Feasibility Study for a Machine