General Average Problem

You've just learned about the concept of general average. Try applying it to the following hypothetical:

A cruise ship docks close to Rome for three days, giving the passengers plenty of time to shop and take in the sights. Unfortunately, the passengers are a bit overzealous in their purchases and fill the ship's cargo beyond capacity. The ship's cargo is worth $100,000. Amanda, one of the passengers, spent the full three days shopping in the stores along Via Condotti, Rome's most fashionable street. Her cargo is valued at $20,000. Barry, another passenger, spent his three days filling a suitcase with keychains from souvenir stores. Barry's cargo is valued at $200. To save the ship from sinking, the captain must throw cargo overboard. He begins with Barry's suitcase and continues until the ship is no longer in danger, discarding $50,000 worth of cargo. Amanda is relievedall of her designer clothes managed to survive the captain's purge. Barry, however, is devastatedhe had planned to add those keychains to his growing collection at home, which nearly fills the garage.

Use the rule of general average to calculate the net cargo value Amanda and Barry will each receive when the ship docks.

Please only enter your number without $ , or .

Answer rating: 100% (QA)

General Average is a principle of maritime law whereby all stakeholders in a sea venture proportionally share any losses resulting from voluntary sacr... View the full answer