Six years ago, Global Exporters paid cash for a new packaging machine that cost $287,000. Three years ago, the firm spent $2,900 on repairs and modifications to the machine. The machine is now fully depreciated and has just sat idly in a back corner of the shop for the past 7 months. The estimated value of the machine today is $124,500. The firm is considering using this machine in a new project. If it does so, what value should be assigned to this machine and included in the initial costs of the new project?

Question

Quizplus · Accepted Answer

The value to be assigned to the machine for the new project is its current estimated value, which is $124,500. This is the opportunity cost of using the machine in the project, as it represents the amount the firm could receive if it sold the machine instead.

Six Years Ago, Global Exporters Paid Cash for a New