Jay has spent $500 purchasing and repairing an old fishing boat, which he expects to sell for $800. He discovers that he needs an additional repair, which will cost $400. He can sell the boat as it is now for $300. What should he do?

Question

Quizplus · Accepted Answer

If Jay completes the repair, he will spend a total of $900 ($500 for the initial purchase and repair + $400 for the additional repair) and sell the boat for $800, resulting in a loss of $100. However, if he sells the boat as is, he will only receive $300, resulting in a loss of $200. Therefore, it makes the most sense for him to complete the repairs and try to sell the boat for $800.

Jay Has Spent $500 Purchasing and Repairing an Old Fishing