Alloy Corp is considering the acquisition of a new processing line. The processor can be purchased

Question

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?
A) $419,025 B) $390,000 C) $375,000 D) $400,025

Answer 1

D