Question 1: Zinc inc. is considering the acquisition of a new processing line. The processor can be purchased for $3,750,000. 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. 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 process?
A) $375,000
B) 419, 025
C) 390, 000
D) 400, 025
Question 2: Which of the following should NOT be included as investment costs in evaluating a capital asset?
A) interest payments and other financing cash flows that result from raising funds to finance a project.
B) Employee training expenses
C) Shipping expenses
D) Installation expenses