Tim has spent $2,500 purchasing and repairing a Hummer, which he expects to sell for $3,500 once the repairs are complete. He discovers that he needs an additional repair, which will cost $1,100, in order to complete the repairs. He can sell the Hummer as it is now for $900. What should he do?

Question

Quizplus · Accepted Answer

Completing the repairs and selling the Hummer for $3,500 would provide Tim with a profit of $900 ($3,500 - $2,500 - $1,100 = $900). Selling the Hummer in its current condition for $900 would result in a loss of $1,600 ($900 - $2,500 = -$1,600). Therefore, completing the repairs and selling the Hummer would be the best choice.

Tim Has Spent $2,500 Purchasing and Repairing a Hummer, Which