A new machine can be purchased for $1,000,000. It will cost $65,000 to ship and

Question

A new machine can be purchased for $1,000,000. It will cost $65,000 to ship and $35,000 to modify the machine. A $30,000 recently completed feasibility study indicated that the firm can employ an existing factory owned by the firm, which would have otherwise been sold for $150,000. The firm will borrow $750,000 to finance the acquisition. Total interest expense for 5 years is expected to approximate $250,000. What is the investment cost of the machine for capital budgeting purposes?

$1,100,000
$1,250,000
$1,280,000
$1,530,000
$ 2,030,000

Explanation / Answer

Same one I just answered. it is (1,000,000+65,000+35,000+150,000)= 1,250,000 b)

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