You just bought a new car for $125,000.Before you had time to get insurance,the car was wrecked.Weird Wally offers to take it off your hands for $10,000.You can then purchase a similar model for $128,000.A body-shop with an excellent reputation offers to rebuild it for $90,000 and loan you a similar model while the vehicle is being rebuilt.Once rebuilt,the body-shop claims,it will run like a new car and nobody will be able to tell the difference.What would you do from a financial point of view?
A)Rebuild to save $13,000.
B)Rebuild to save $28,000.
C)Rebuild to save $38,000.
D)Sell to Weird Wally and save $7,000.
$128,000-10,000 = $118,000;$118,000 - $90,000 = $28,000 benefit to rebuild

Question

Quizplus · Accepted Answer

Rebuilding the car costs $90,000, and buying a new one costs $128,000. The difference is $38,000, but since you can sell the wreck for $10,000, the net savings from rebuilding is $28,000.

You Just Bought a New Car for $125,000