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D. All of the above.
13. In 2003 the Government of Canada ordered a fleet of 50 Atlas Helicopters from
Apollo Aerospace to be delivered in 2006. It paid Apollo Aerospace a non-refundable
deposit of $50m upon signing the deal. In 2004 the government made another nonrefundable payment of $100m. At that time the government also signed a contract
stipulating that it would have to pay a cancellation fee of $100m if it cancelled the
contract at any future date prior to delivery. In 2005 the government conducted a review
of its military strategy and concluded that the Apollo Helicopters were no longer suited to
its needs. The government had two options available to it:  cancel the order and pay
the $100m cancellation fee; or  make a final payment of $400m, take delivery of the
useless helicopters and sell them on eBay for $200m.*
Which option should the government have chosen?
A. Option 
B. Option 
14. Recall Question 13 above. At the time of the re-evaluation in 2005, sunk costs were
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This document was uploaded on 03/03/2014.
- Spring '14