Holt Bolts, Inc. is considering building a new factory. The company bought vacant land in the city 25 years ago for $550,000 on which the new factory could be built. However, a residential property developer has made the company an offer to buy the land for $3,000,000 if it decides not to build a factory on the site. It would cost $3,000,000 to build the factory. What would the Initial Investment (cash flow in Year 0) be for purposes of calculating whether or not to build the factory

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Secured loans are protected by collateral security. examples: title loans where the borrower uses the car title as collateral security interest rates are lower and repayments are longer therefore risk is low as a collateral security is given as guarantee to the bank in case of failure to pay the loanunsecured loans are not protected by collateral security but it is given on the creditworthiness of the borrower, trusting that she/he will pay on time. examples; payday loans is a short term loan where the borrower lends money from the bank and pays is back when the borrower receives his/her wages.interest rates are high and repayments are shorter. but the risk is high as no collateral security is given as a guarantee to the bank for payment of the loan

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