What is the relevant cost of the equipment

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Reference no: EM132925627

Problem - Birch pic is considering a new project that will require the use of equipment which is already held and which has a carrying value in the financial statements of f250,000. If the project is not undertaken, the equipment may be sold for f180,000 or used for another project. If it is used for another project, Birch pic will avoid having to acquire further equipment costing $240,000. To make the existing equipment suitable for the other project, however, some modifications costing $10,000 to the equipment will have to be carried out. What is the relevant cost of the equipment to be used when calculating the net present value of the new project?

Reference no: EM132925627

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