Question

The new proposed project needs to use an expensive medical equipment that is already owned by the company. The purchase price of this equipment is $640,000 . The company also spent $71,000 to update its operating software. The equipment recieved a recent market bid from an interested buyer of $768,000. The current book value of $525,000. If the company decides to use this equipment for the new project , what value should we use for this equipment to be included in the initial cash flow of the project

Answer 1

$525,000

Step-by-step explanation:

Given that

The purchase price of an equipment $640,000

The company spend on operating software is $71,000

The recent market bid is $768,000

And, the current book value is $525,000

As the company decided to use the equipment for the new project so the amount that should be included in the initial cash flow would be $525,000 as the same would be presented on the balance sheet. It would be the cash outflow for the company