complete the repairs and sell the car for $13,000. sell the car now for $10,000.

Question

       complete the repairs and sell the car for $13,000.
       sell the car now for $10,000.
       never try such an expensive project again.
       be indifferent between (i) selling the car now and (ii) replacing the engine and then selling it.

Rick buys a 1966 Mustang for $3,000, planning to restore and sell the car. He goes on to spend $9,000 restoring the car. At this point he can sell the car for $10,000. As an alternative, he can spend an additional $3,000 replacing the engine. With a new engine the car would sell for $13,000. Rick should

Explanation / Answer

D) be indifferent between (i) selling the car now and (ii) replacing the engine and then selling it.

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