113 review questions copy

113 review questions copy

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Unformatted text preview: n. 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: [1] cancel the order and pay the $100m cancellation fee; or [2] 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 [1] B. Option [2] 14. Recall Question 13 above. At the time of the re-evaluation in 2005, sunk costs were equal to...
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This document was uploaded on 03/03/2014.

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