John buys a 1948 Ford F47, which he plans to restore and sell. He anticipates that the cost of the truck and the repairs will be $11,000 and that he can sell it for $20,000. After he has spent $11,000, he discovers he needs to replace the engine, which will cost $5000. He can sell the truck without the new engine for $14,000. What should John do?

Question

Quizplus · Accepted Answer

Completing the repairs and selling the truck for $20,000 results in a total cost of $16,000 ($11,000 + $5,000), leading to a profit of $4,000, which is better than selling it now for $14,000, resulting in a loss of $3,000 ($14,000 - $11,000 initial cost).

John Buys a 1948 Ford F47, Which He Plans to Restore