Blown Transmission?

Hey guys,

I have a 2006 Mustang GT automatic, and was coming home from work. The car was shifting up and right when it was going to 3rd gear, I heard a clunk and now the transmission will only connect in first gear. It won't go up to any other gear, and it won't connect to reverse. I drove it to a nearby mechanic and they are saying the transmission is shot and I need it replaced. Does this sound about right or is there anything simpler that could have happened?

Thanks

I've never had transmission work, I bought the car brand new over 5 years ago. It has 65,000 miles. I've been using Bamachips 87 octane tune since 30,000 miles.

As of lately, the car has seemed to be shifting up fine, but when I would be slowing down it seemed to be sluggish to shift. So, coming to a stop, as it would be going from 2nd to 1st, it would seem delayed to shift down, and then all of a sudden it would kind of clunk in the rear to shift down.