Question

Stephen is restoring a car and has already spent $4,000 on the restoration. he expects to be able to sell the car for $5800. stephen discovers that he needs to do an additional $2,400 of work to make the car worth $5,800 to potential buyers. he could also sell the car now, without completing the additional work, for $3,800. what should he do

Answer 1

Answer:

Sell the car for $ 3 800

Explanation:

Thinking process:

The amount already spend = $ 4 000

a) To sell the car without additional work costs $ 5 800

The profit at that time will be $ 5 800 - $ 4 000 = $ 1 800

b) If he were to do additional work: $ 4000 + $ 2 400 = $ 6 400

That will be $ 6 400 - $ 5 800 = $ 600 (loss)

c) The loss will be better if he sells it for $  3 800 - $ 4 000 = $ 200

So it will be better to sell it at $ 3 800 with minimum loss.

Answer 2

He should just seek the car for 3,800 if he was to continue with the restoration he would lose and extra 600 bucks. hes already lost 200 investing in the car already. so either way hes not making any sort of profit. hes just waiting his time.