2-7. Suppose your company has just discovered $100,000 worth (this is the original manufacturing cost) of obsolete

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2-7. Suppose your company has just discovered $100,000 worth (this is the original manufacturing cost) of obsolete inventory in an old warehouse. Your boss asks you to evaluate two options: (1) remachine the obsolete parts at a cost of $30,000 and then hopefully resell them for $60,000 or (2) scrap them for $15,000 cash (which is certain) through a secondhand market. What recommendation would you make to your boss? Explain your reasoning. (2.1)

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Engineering Economy

ISBN: 9780134870069

17th Edition

Authors: William Sullivan, Elin Wicks, C Koelling

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