When evaluating the expansion option-initial cost of project

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Reference no: EM13911438

Wilbert's, Inc. paid $90,000, in cash, for a piece of equipment three years ago. Last year, the company spent $10,000 to update the equipment with the latest technology. The company no longer uses this equipment in their current operations and has received an offer of $50,000 from a firm who would like to purchase it. Wilbert's is debating whether to sell the equipment or to expand their operations such that the equipment can be used. When evaluating the expansion option, what value, if any, should Wilbert's assign to this equipment as an initial cost of the project? The answer is $50,000. Can someone explain why conceptually?

Reference no: EM13911438

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