Kevin Is Re-Finishing an Antique Grandfather Clock That He Purchased

question 89

Multiple Choice

Kevin is re-finishing an antique grandfather clock that he purchased at a flea market for $300.He expects to be able to sell the clock for $450.At the last minute,Kevin discovers that he needs to repair the gears at a cost of $175 to make the clock worth $450 to potential buyers.It turns out that he could also sell the clock now,without completing the additional repairs,for $250.What should Kevin do?

• A) He should sell the clock now for $250.
• B) He should keep the clock but not make the repairs since the original $300 is a sunk cost.
• C) He should complete the additional repairs and sell the clock for $450.
• D) He should keep the clock after making the repairs since it is not rational to spend a total of $475 on an item that can only be sold for $450.
• E) Kevin is indifferent between selling the clock as is or selling it after completing the repairs.

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Definitions:

Tender Offers

Public offers made by a person or entity to purchase a significant percentage of a company's shares or bonds.

Cash-Out Combinations

Business transactions where shareholders of a company being acquired or merged are paid in cash instead of receiving shares of the acquiring or merging entity.

Minority Shareholders

Shareholders who own a smaller portion of a company's shares and typically do not have controlling interests or significant influence on business decisions.

Oppressive Acts

Behaviors or actions by directors or majority shareholders in a corporation that are burdensome, harsh, or wrongful against minority shareholders.