DeShawn has spent $600 purchasing and repairing an old fishing boat,which he expects to sell for $900 once the repairs are complete.DeShawn discovers that,in addition to the $600 he has already spent,he needs to make an additional repair,which will cost another $400,in order to make the boat worth $900 to potential buyers.He can sell the boat as it is now for $400.What should he do?

Question

Quizplus · Accepted Answer

DeShawn should complete the additional repair and then sell the boat for $900. This will ensure that he can recoup his initial investment of $600 as well as the cost of the additional repair, resulting in a profit of $300. If he sells the boat as it is now for $400, he will lose $200 on his initial investment. Keeping the boat would not be rational as he would have invested a total of $1,000, but the boat would only be worth $900. Therefore, completing the repairs and selling the boat for $900 is the best choice.

DeShawn Has Spent $600 Purchasing and Repairing an Old Fishing