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What is the relevant cost of the machine to the new contract

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Question - A company is considering whether to enter into a new project. The machinery which would be used to produce the goods for the contract was purchased seven years ago at a cost of 80 000 dollars, with an estimated life of ten years. Depreciation is on a straight-line basis. The machinery has been idle for some time, and if not used on this contract would be scrapped and sold immediately for an estimated 5 000 dollars. After use on this contract the machinery would have no value, and would have to be dismantled and disposed of at a cost of 1 500 dollars. Ignoring the time value of money, what is the relevant cost of the machine to the new contract?

Reference no: EM132514259

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