Part 1:

Consider the following capital budgeting and cash flow estimation problem. You have developed a new energy drink that uses various vegetables. The drink is called V-DRINK. You have an existing building that you are using to produce V-DRINK. The building is fully depreciated. You determine a need to buy $400,000 in equipment. Shipping and installation is an additional $50,000. Additionally you determine you will need to have $15,904 in inventory. What is the total initial outlay associated with the project?

Answer: 465,904

Part 2:

The equipment cost (equipment plus shipping and installation) can be depreciated at the rate of 22% the first year. The remaining 5 years (years 2-6) the depreciation will be equal to $30,000 per year. What is the amount of depreciation in year 1?