Canvas Reproduction, Inc., has spent $4,500 dollars researching a new project

Canvas Reproduction, Inc., has spent $4,500 dollars researching a new project. The project requires $20,000 worth of new machinery, which would cost $3,000 to install. The company would realize $4,500 in after-tax proceeds from the sale of old machinery. If Canvas’s working capital is unaffected by this project, what is the initial investment amount for this project?

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Iridium Corp. has spent $3.5 billion over the past decade developing a satellite, based telecommunication system

Iridium Corp. has spent $3.5 billion over the past decade developing a satellite, based telecommunication system. It is currently trying to decide whether to spend an additional $350 million on the project. The firm expects that this outlay will finish the project and will generate cash flow of $15 million per year over the next 5 years. The competitor has offered $450 million for the satellites already in orbit. Classify the firm’s outlays as sunk costs or opportunity costs, and specify the relevant cash flows.

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