B Ltd wishes to invest in a new project. It will have to transfer an existing machine between production departments at a cost of 120,000.

This machine was bought 2 years ago at a cost of600,000 and has a current book value of 130,000.

In order to carry on existing projects a replacement machine will have to be bought for 550,000.

What is the relevant machinery cost for the new project?

a) 550,000

b) 250,000

c) 670,000

d) 430,000