Question

ridium Corp. has spent $ 3.2 billion over the past decade developing a​ satellite-based telecommunication system. It is currently trying to decide whether to spend an additional $ 356 million on the project. The firm expects that this outlay will finish the project and will generate cash flow of $ 15.2 million per year over the next 5 years. A competitor has offered  $ 452 million for the satellites already in orbit. Classify the​ firm's outlays as sunk costs or opportunity costs​, and specify the incremental cash flows.

The

$ 3.2$3.2

billion already spent is

▼

and it is

▼

an irrelevant cash flow

a relevant cash flow

. ​(Select from the​ drop-down menus.)

The

$ 356$356

million is an incremental cash outflow and it is

▼

. ​(Select from the​drop-down menus.)

The

$ 15.2$15.2

million per year is a cash inflow and it is

▼

an irrelevant cash flow

a relevant cash flow

. ​(Select from the​drop-down menus.)

The

$ 452$452

million offer for satellites is

▼

a sunk cost

an opportunity cost

and it is

▼

an irrelevant cash flow

a relevant cash flow

. ​(Select from the​ drop-down menus.)

Answer 1