Describe what is meant by contract discharge through commercial impracticability
What will be an ideal response?
The courts have sought to enlarge the grounds for discharge of a contract by adding the concept of commercial impracticability, defined as a situation in which performance is impracticable because of unreasonable expense, injury, or loss to one party. In effect, a situation that was not foreseeable, or the nonoccurrence of which was assumed at the time the contract was executed, in fact, occurs, making performance of the contract unreasonably expensive or injurious to a party. For example, a plastics manufacturer becomes extremely short of raw materials because of a war and an embargo on oil coming from the Middle East. The manufacturer's contracts with retailers for plastic goods will be discharged in most cases if the court finds that the manufacturer could not have anticipated the war and had no alternative source of materials costing above the same price.
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All of the following are useful for understanding Profitability Index, except:
A. A profitability index less than 1 equals a negative NPV. B. A profitability index greater than 1 equals a positive NPV. C. The denominator for the profitability index is the cost of the project. D. The initial investment is excluded when calculating the present value of the future cash flows. E. The initial investment is included when calculating the present value of the future cash flows.
Giant Koala Stores Inc has forecasted sales for July and August in the top row of the table. Giant Koala makes 85% of its sales for cash and the remainder on credit. The credit sales are collected one month after the sale
What are Giant Koala's forecasted total cash inflows in August? Sales Forecast and Cash Collections Giant Koala Stores Inc ($000,000) July August Sales Forecast $18.000 $18.000 Cash Sales 15.300 Collections from last month Total Cash Inflows A) $17 million B) $18 million C) $19 million D) $21.15 million E) $21.4 million