18. Five years ago, Mahmoud Manufacturing Corporation purchased expensive packaging equipment for $150,000 and subsequently added $100,000 in improvements to make the equipment fit company requirements. The current book value of the equipment is $200,000. There are two options for future use of the property: 1) The equipment can be sold today for $400,000 after-tax. 2) The equipment can be modified for another $50,000 and used in packaging a new product project.

18. Five years ago, Mahmoud Manufacturing Corporation purchased expensive packaging equipment for $150,000 and subsequently added $100,000 in improvements to make the equipment fit company requirements. The current book value of the equipment is $200,000. There are two options for future use of the property: 1) The equipment can be sold today for $400,000 after-tax. 2) The equipment can be modified for another $50,000 and used in packaging a new product project. 18. Five years ago, Mahmoud Manufacturing Corporation purchased expensive packaging equipment for $150,000 and subsequently added $100,000 in improvements to make the equipment fit company requirements. The current book value of the equipment is $200,000. There are two options for future use of the property: 1) The equipment can be sold today for $400,000 after-tax. 2) The equipment can be modified for another $50,000 and used in packaging a new product project. In consideration of the new product project, what amount (if any) should the equipment be valued at? a. Valued at zero since it is a sunk cost. b. Valued at book value of $200,000. c. Valued at book value of $200,000 minus $100,000 in improvements. d. Valued at market value of $400,000. e. Cannot be determined without more information