Stan buys a 1966 Mustang,which he plans to restore and sell.He anticipates that the cost of the car and the repairs will be $8000 and that he can sell it for $10 000.When he has spent $7000,he discovers he needs to replace the engine,which will cost $4000.He can sell the car without the new engine for $9000.What should Stan do?

Question

Quizplus · Accepted Answer

If Stan decides to complete the repairs, he will have spent $11,000 ($8000 initial cost + $4000 engine replacement) and can sell the car for $10,000. This means he would operate at a loss of $1000. Therefore, it would be better for him to sell the car now for $9000 and cut his losses.

Stan Buys a 1966 Mustang,which He Plans to Restore and Sell.He