Mike has spent $500 purchasing and repairing an old fishing boat,which he expects to sell for $800 once the repairs are complete.Mike discovers that,in addition to the $500 he has already spent,he needs to make an additional repair,which will cost another $400,in order to make the boat worth $800 to potential buyers.He can sell the boat as it is now for $300.What should he do?

Question

Quizplus · Accepted Answer

By completing the additional repair, Mike would have spent a total of $900 on purchasing and repairing the boat. However, he would be able to sell it for its full value of $800, resulting in a loss of $100. On the other hand, if he sells the boat as it is now for $300, he would have incurred a loss of $200. Therefore, it is better for Mike to complete the repairs and sell the boat for its full value of $800, which would result in a smaller loss.

Mike Has Spent $500 Purchasing and Repairing an Old Fishing