Monica has spent $30 000 purchasing and repairing an old cabin,which she expects to sell for $40 000.She discovers that she needs an additional repair,which will cost $20 000.She can sell the cabin as it is now for $25 000.What should she do?

Question

Quizplus · Accepted Answer

Monica should take the $25,000 because if she spends an additional $20,000 on repairs, her total cost will be $50,000, and she will only sell it for $40,000, resulting in a $10,000 loss. Selling it now minimizes her loss to $5,000.

Monica Has Spent $30 000 Purchasing and Repairing an Old