You have just finished paying off the $10,000 loan on your car, and it stops working. Your mechanic tells you that it will cost $1,000 to repair it. Your car is quite old and you are hesitant to put another $1,000 into it. Instead, you are contemplating purchasing a much newer car for $15,000. You want to get your wheels back. What should you do? How would your answer change if you took the expected life of the vehicle into consideration? NOTE: Answer this question by applying the economic decision rule.

Question

Quizplus · Accepted Answer

The Answer of You have just finished paying off the $10,000 loan on your car, and it stops working. Your mechanic tells you that it will cost $1,000 to repair it. Your car is quite old and you are hesitant to put another $1,000 into it. Instead, you are contemplating purchasing a much newer car for $15,000. You want to get your wheels back. What should you do? How would your answer change if you took the expected life of the vehicle into consideration? NOTE: Answer this question by applying the economic decision rule.

You Have Just Finished Paying Off the $10,000 Loan on Your