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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 Preview

    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 ...

    Solution Summary

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