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?
IN excel attached for better formatting and to see how it is summed up for you:
Downpayment (part not financed) $250,000.00 ...
Knowing what to include and exclude can make all the difference! This solution includes a discussion of why some items are ignored.