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If you decide to start a project where you have to invest $ 50,000 in opening...

If you decide to start a project where you have to invest $ 50,000 in opening general expenses and you must also buy a machine on credit that costs $ 250,000 with a down payment of $ 35,000 at a rate of 15%. How much will your initial investment be?

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Answer #1

The Correct answer is $300,000

The Initial investment is the amount that the company incurr for the purchase and the installation of the machine. The purchase price of the machine is $250,000 and company has to incurr extra expenses for the machine which is $50,000.

So, Initial Investment = Purchase price of machine + Opening general expense

= 250,000 + 50,000

= 300,000

Note: Down payment is the payment option which is not the cost so it would not be added.

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