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Birch plc is considering a new project that will require the use of equipment which is already held and which has a carrying value in

Birch plc is considering a new project that will require the use of equipment which is already held and which has a carrying value in the financial statements of

250,000.

If the project is not undertaken, the equipment may be sold for

180,000

or used for another project. If it is used for another project, Birch plc will avoid having to acquire further equipment costing

240,000.

To make the existing equipment suitable for the other project, however, some modifications costing

10,000

to the equipment will have to be carried out.

What is the relevant cost of the equipment to be used when calculating the net present value of the new project?

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