Fact Pattern 14-1

question 35

Multiple Choice

Fact Pattern 14-1
Internet Cafes, Inc., contracts to buy all of its requirements for coffee, at a minimum of 1 million pounds per year, from Java Corporation for six years. After three years, Internet tells Java that it plans to sell its company to Kwik Eateries, Inc. Kwik refuses to assure Java that it will continue Internet’s contract.
-Refer to Fact Pattern 14-1.Kwik's refusal constitutes

• A)a justified response based on Kwik's relation to the contract.
• B)an assignment of Internet's rights under the contract.
• C)a reasonable suspension of performance under the contract.
• D)a repudiation of the contract.

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Definitions:

CCA Rate

Capital Cost Allowance rate; a method of depreciation used for tax purposes in Canada, allowing a business to deduct the cost of certain assets.

Required Rate of Return

The minimum percentage return an investor expects to achieve by investing in a specific asset or project.

Net Working Capital

The gap between a firm's current assets and its current liabilities, showcasing the business's liquidity and its ability to operate efficiently.

Project Analysis

The process of evaluating the financial viability, stability, and profitability of a project before committing resources.