Question

Bill is restoring a car and has already spent $4000 on the restoration. He expects to be able to sell the car for $6200. Bill discovers that he needs to do an additional $2400 of work to make the car worth $6200 to potential buyers. He could also sell the car now, without completing the additional work, for $3800. What should he do

Answer 1

In the given case, Bill has already incurred $4,000 on the restoration and now he has two options for the car.

In the first option he can sell the car for $6200 after sending additional Cost of $2400. So net loss under this option shall be = (4000+2400)-6200 = $200

In the second option, he can sell the car for $3800 without incurring any additional cost. So net loss under this option shall be = 4000-3800 = $200

We can see that the net loss is same under both the options so Bill can go for any option.