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

Question

Quizplus · Accepted Answer

If Mike completes the repairs, he can sell the boat for $800, which is a profit of $300 ($800 - $500 initial cost). Even after accounting for the additional $400 repair, he will still make a profit of $100 ($800 - $500 - $400). Therefore, completing the repairs and selling the boat is the best choice for him.

Mike Has Spent $500 Purchasing and Repairing an Old Fishing