Question: Exercise 1 _ ch 6 _ no 1 ( Sunk costs ) : We return to the sunk costs example of Section 6 . 2

Exercise 1_ch6_no1(Sunk costs): We return to the sunk costs example of Section 6.2. You have invested $100,000 in a badly built house. For $20,000 invested today, you can fix up the house and sell it one year from today for $90,000. As an alternative, you can sell the house today for $60,000.
a.) Should you take into account the $100,000 cost already invested in the house?
b.) If the relevant discount rate is 9%, which alternative should you prefer?
c.) What is the discount rate that makes you indifferent between the two alternatives?

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