University of Florida Acme Aviation Case Study

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Cngevq007

Business Finance

University of Florida

Description

In your course textbook, read Exercise 24, Acme-Aviation (AA) in Chapter 10, page 10-30.Requirements:

1.You are the  expert that has been hired by Fast Deliveries to develop a damages  estimate for them that you will defend in deposition and at trial, if  necessary. Using the information provided, prepare a preliminary damages  estimate and explain the basis for your opinion on each item. Identify  any questions or information you would to see or analyze to support your  damages estimate.

2.You are an expert who has been hired by Acme Aviation to  develop a damages estimate for them that you will defend in deposition  and at trial, if necessary. Using the information provides, prepare a  preliminary damages estimate and explain the basis for your opinion on  each item. Identify any questions or information you would to see or  analyze to support your damages estimate.

Explanation & Answer:
4 pages
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Explanation & Answer

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1

Acme Aviation Case Study

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Acme Aviation Case Study
From the case study, some details are important in determining the legal obligation of the
two companies to maintain the terms of the contract and ensure it is legally binding. The law
provides specific stipulations on the consequences of terminating the contract prematurely. The
primary goal of this analysis is to identify the obligation of the two companies in the contract as
well as the estimation of the losses caused by the failure to obey the contract terms. There are
damages incurred as a result of the termination of the contract by Acme Aviation and they could
be the actual cause of the bankruptcy of Fast Deliveries.
Fast Deliveries
Fast Deliveries is the most affected party following the termination of the contract by Acme
Aviation. The losses incurred are described as follows.
Increased overhead cost for 2 years-$110,000 x 2=$220, 000
The increased cost of delivery for 2 years - $140, 000 x 2 =$280, 000
Increased cost of shipping for 2 years-$250, 000 x 2= $500,000
These costs sum up to $1,000,000
The estimated profits and sales for the coming years- $800,000
Overall damages caused by the cancellation of the contract sum to $1,800,000.
There is a loss of profit on the side of Fast Deliveries as a result of the opportunity cost
which could eventually lead to bankr...


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