For description below:

The production line for D-SAFE can be started after renovating one existing section of the factory. The project is expected to run for five years when the targeted final version of D-SAFE will be ready to introduce. Required renovation can be conducted immediately at a cost of $157,000 that includes installation cost of new plant and equipment (P&E). The company has decided to capitalise total renovation costs to new P&E. The pre-launching expenses required for the project will be a one-off payment at the beginning and estimated to be $370,000. The project requires continuing quality assurance inspection that will cost $5,000 per month.

A local distributor of a Swedish company can immediately supply all required parts and accessories of the new P&E for a total charge of $5,100,000 including import duty of $250,000. In addition, for new P&E, transportation cost is estimated to be $43,000. These P&E would bedepreciated using a tax allowable straight-line rate of 15% on prime cost. The company can sell P&E at the termination of the project for $520,000.

What should be the new PPE cost for D-SAFE? Are the renovation and pre-start costs also included in the new PPE cost?