(Relevant vs. sunk costs) Your friend, Bill Hawkins, purchased a new combination phone and answering machine just prior to the start of this school term. He paid COMMUNICATION $95 for the equipment. Shortly after the start of the semester, during a party at ACTIVITIES his apartment, Bill’s answering machine was crushed by an errant “flying plant.”

Returning the equipment to his retailer, Bill was informed that the estimated cost of repairs was $45. ' 0 Bill, pondering the figures, was ready to conclude that repairs should be made; after all, he had recently paid $95 for the equipment. However, before making a decision, Bill decided to ask for your advice, knowing that you were enrolled in an accounting course this term.

a. Using concepts learned from this chapter,-prepare a brief oral presentation for Bill that outlines factors Bill should consider in making his decision.

b. Follow the presentation in part a with a brief oral presentation of the options Bill should consider in making his decision. Start by defining a base case against which alternatives may be compared.

LO1