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Problems and issues

Decision to be taken by the Department of NationalDefence

To close the military base between

The Vancouver, BC

Halifax, Nova Scotia

What factors contribute towards closing the navalbase:

Military and political factors Cost Savings

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Analyzing the Data

Vancouver Base, BC Initial building cost-$100 million

Operating cost-$400 million per year

No lease rental payment for using the land as the land is owned by ND

Disposal value of land-$500

Halifax base, Nova Scotia Initial building cost-$150 million

Annual lease payment for land-$3 million

5 % Interest can be earned which is $3 million by investing $60 million in a fixedincome note

Operating cost-$ 300 million additional operating cost $100 million will be increased if Vancouver Base is closed

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Relevant and irrelevant factors

Vancouver Base, BC Initial building cost-$100 million-sunk cost-Irrelevant

Operating cost-$400 million per year-relevant

No lease rental payment for using the land as the land is owned by ND

Disposal value of land-$500-Relevant

Future increase of the land will be irrelevant because Vancouver Base must be keptopen if Halifax Base is shut down and will not be able to sell the land in future date

Halifax base, Nova Scotia Initial building cost-$150 million-Irrelevant being sunk cost

Annual lease payment for land-$3 million-Relevant

5 % Interest can be earned which is $3 million by investing $60 million in a fixedincome note-Relevant

Operating cost-$ 300 million-Relevant

additional operating cost $100 million will be increased if Vancouver Base is closed-Relevant

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More relevant information

Relevant factors if Vancouver is closed Disposal value of land-$500 million

Operating cost savings-$400 million

Additional cost to be borne by Halifax-$100 m

Net savings= $500 + $400-$100 or $800

Relevant factors if Halifax is closed Operating cost savings-$300 million

Lease payment savings-$3 million

Interest earned-$3

Investment savings- $60 million

Net savings= $300 + $3-$3+$60 or $360

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Decision Criteria-Quantitative

Net savings of $ 440($ 800 - $ 360) to The Department ofNational Defence if Vancouver Naval Base is closed inspite ofargument for closing the Halifax Naval Base by The British

Columbia delegation

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Decision Criteria-Qualitative

Uses of land at Vancouver base may be questionable orobjectionable from environmentalist as the land will besold to private developers

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