In a visit to a used car dealer kim found a four year old

Assignment Help Accounting Basics

Reference no: EM13571824

Kim Murphy purchased a 1997 LeBaron Convertible in 2005 for $5,000. Since purchasing the car, she has spent the following amounts on parts and labor:

Fuel pump $120

canvas top $265

master cylinder $135

disk brakes $150

hoses,plugs $80

Labor $250

Total $1,000

Kim is not totally satisfied with the LeBaron. to bring the car to a condition that she feels it should be, she anticipates the following cost of restoration:

Rebuilt engine $700

New paint job $800

tires $360

New interior $500

Misc maintenance $340

Total $2,700

In a visit to a used car dealer, kim found a four year old eclipse in mint condition for $7,000. Kim has advertised and found that she can sell the Labaron for only $3,000. if she buys the eclipse, Kim will pay cash, but she would need to sell the LeBaron.

Required

Using the 5 step sequence

A. in trying to decide whether to restore the Lebaron or buy the eclipse, Kim is distressed because she already has spent $6,000 on the LeBaron. The investment seems too much to give up. How would you react to Kim's concerns?

B. List all cost that are relevant to Kim's decision. What advice would you give Kim?

Reference no: EM13571824

Questions Cloud

Prepare the necessary journal entries assuming the : the common stock of warner inc. is currently selling at 112 per share. the directors wish to reduce the share price and

While the image of the soldier poet may seem like an : while the image of the soldier poet may seem like an unlikely mix the devastating effects of technological warfare

James river 338preferred is selling for 4525 the preferred : james river 3.38preferred is selling for 45.25. the preferred dividend isnon-growing. what is the required return on

The human resources department at tri-state corporation was : what will your portfolio be worth in 10 years? in 20 years? when you stop working? the human resources department at

In a visit to a used car dealer kim found a four year old : kim murphy purchased a 1997 lebaron convertible in 2005 for 5000. since purchasing the car she has spent the following

Explain whether you agree with the opinion of many : explain whether you agree with the opinion of many parisians in 1889 that the eiffel tower was a ridiculous eyesore

Pascal inc is planning to sell 800000 units for 150 per : pascal inc. is planning to sell 800000 units for 1.50 per unit. the contribution margin ratio is 20. if pascal will

Prepair a complete statement of cash flows using above : prepair a complete statement of cash flows using above pictures. report its operating activities using the indirent

Ceacutezanne returned again and again to paint his mountain : ceacutezanne returned again and again to paint his mountain. explain why you think an artist might choose to repaint a

User Account

All Pages