Russell has spent $10,000 purchasing and repairing a Land Rover Defender, which he expects to sell for $14,000. He discovers that he needs an additional repair, which will cost $4400. He can sell the Land Rover Defender as it is now for $3600. What should he do?

Question

Quizplus · Accepted Answer

If Russell sells the Land Rover for $3600 without completing the additional repair, he will get a loss of $6400 ($10,000 - $4400 - $3600). However, if he completes the additional repair and sells the Land Rover for $14,000, he will get a profit of $1,600 ($14,000 - $10,000 - $4,400). Therefore, it makes more sense for Russell to spend the extra $4,400 on the additional repair and sell the Land Rover for a profit of $1600 instead of taking a loss of $6,400. Hence Option C is the best choice.

Russell Has Spent $10,000 Purchasing and Repairing a Land Rover