Dune Ltd is considering a project that will require the use of a crane that cost £600,000 when it wasacquired four years ago and which has a current carrying amount (statement of financial position value)of £370,000. If the project is not undertaken, the crane could be sold for £180,000 or it could be used foranother project. If it is used for the other project, the business will not have to purchase another cranefor £250,000. The business uses the net present value (NPV) method to appraise investment projects.What is the relevant cost of the machine when calculating the NPV of the project?O a. £180,000O b. £370,000O c. £780,000O d. £250,000e. £600,000

Introduction:- NPV is Calculated by deducting present values of expected/projected cash outflows…

Dune Ltd is considering a project that will require the use of a crane that cost £600,000 when it was acquired four years ago and which has a current carrying amount (statement of financial position value) of £370,000. If the project is not undertaken, the crane could be sold for £180,000 or it could be used fo another project. If it is used for the other project, the business will not have to purchase another crane for £250,000. The business uses the net present value (NPV) method to appraise investment projects. What is the relevant cost of the machine when calculating the NPV of the project? O a. £180,000 O b. £370,000 O c. £780,000 O d. £250,000

Dune Ltd is considering a project that will require the use of a crane that cost £600,000 when it was acquired four years ago and which has a current carrying amount (statement of financial position value) of £370,000. If the project is not undertaken, the crane could be sold for £180,000 or it could be used fo another project. If it is used for the other project, the business will not have to purchase another crane for £250,000. The business uses the net present value (NPV) method to appraise investment projects. What is the relevant cost of the machine when calculating the NPV of the project? O a. £180,000 O b. £370,000 O c. £780,000 O d. £250,000

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 10P

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