Tim has spent $2500 purchasing and repairing a Hummer,which he expects to sell for $3500.He discovers that he needs an additional repair,which will cost $1100.He can sell the Hummer as it is now for $900.What should he do
A)He should take the $900.
B)He should never sell something for less than it cost.
C)He should complete the repairs and sell the Hummer.
D)It doesn't matter which action he takes; the outcome is the same either way.

Question

Quizplus · Accepted Answer

If Tim completes the additional repair and sells the Hummer for $3500, he will earn a profit of $900 ($3500 - $2500 - $1100). If he sells the Hummer as it is now for $900, he will lose $1600 ($2500 - $900). Therefore, to maximize his profit, Tim should complete the additional repair and sell the Hummer for its projected value.

Tim Has Spent $2500 Purchasing and Repairing a Hummer,which He