Lexi buys and sells real estate. Two weeks ago, she paid $40…
Lexi buys and sells real estate. Two weeks ago, she paid $400,000 for a house on Pine Street, intending to spend $75,000 on repairs and then sell the house for $550,000. Last week, the city government announced a plan to build a new landfill on Pine Street just down the street from the house Lexi purchased. As a result of the city’s announced plan, she is weighing two alternatives: go ahead with the $75,000 in repairs and then sell the house for $380,000, or forgo the repairs and sell the house as it is for $300,000. Lexi should