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Rockstar Ltd purchased a manufacturing plant at a cost of N$3,450,000 (VAT inclusive). The manufacturing plant was tested at a cost of N$50,000 and the
Rockstar Ltd purchased a manufacturing plant at a cost of N$3,450,000 (VAT inclusive). The manufacturing plant was tested at a cost of N$50,000 and the samples manufactured during testing can be sold for N$20,000. Rockstar Ltd is required to dismantle the plant and restore the site at the end of the plant's useful life. It is estimated that it will cost N$500,000 to dismantle the machine at the end of year 15. A fair discount factor is 10% per annum (before tax, compounded annually). Rockstar Ltd spent N$250,000 on advertising the product to be manufactured by the plant. Due to initial operating inefficiencies, a total loss of N$150,000 was incurred in the first year of operation. Required: Calculate the cost of the manufacturing plant
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