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

Multiple Choice

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 project?

A) $3,025,000
B) $2,950,000
C) $2,575,000
D) $2,350,000