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What is part of the cost of the project? Capital Budgeting

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Equipment cost $1,100,000
Borrow $750,000 to finance equipment
$250,000 total 5 year interest expense
Spent $30,000 on recent feasibility study that recommended using own warehouse that would have been sold for $150,000

How do I figure the investment cost for capital budgeting?

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Solution Summary

Knowing what to include and exclude can make all the difference! This solution includes a discussion of why some items are ignored.

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IN excel attached for better formatting and to see how it is summed up for you:

Equipment $1,100,000.00
Downpayment (part not financed) $250,000.00 ...

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Carol Sargent, PhD
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  • MSc, University of Virginia
  • PhD, Georgia State University
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