Zane's Vanes is a service that restores old weather vanes.Zane has just spent $125 purchasing a 1920s-era weather vane which he expects to restore and sell for $500 once the work is completed.After having spent $125,Zane realizes that he will need to spend an additional $200 on materials to complete the restoration.Alternatively,he can sell the weather vane without restoring it for $200.What should he do?
A)He should sell the weather vane now to make the most profit.
B)It does not matter what he does; he is going to take a loss on the project.
C)He should finish the restoration and then sell the weather vane.
D)He should sell the weather vane back to the party he purchased it from and cut his losses.

Question

Quizplus · Accepted Answer

Zane should finish the restoration, as he will earn $500 for selling the weather vane once restored. Although he has spent $125 for purchasing the weather vane and needs to spend an additional $200 on materials for the restoration, he will still earn a profit of $175 ($500 - $125 - $200). Selling the weather vane without restoring will only get him $200, resulting in a loss of $125 ($125 spent for purchasing the weather vane). Therefore, the best option for Zane would be to finish the restoration and then sell the weather vane.

Zane's Vanes Is a Service That Restores Old Weather Vanes