Question

A businessman bought a car dealership that is incurring a loss of $500,000 a year. He decided to strategize in order to turn the business around. In addition to the $500,000 annual loss, his fixed cost for running the dealership on a monthly basis is $5,000. The number of cars sold per week and their probabilities mimic the outcomes of three coins being flipped. The number of cars sold in a week was observed to be the same as the number of tails that appear when three coins are flipped. See the distribution:

Number of Tails: 0 1 2 3
Probability: 1/8 3/8 3/8 1/8
Given that there are 52 weeks in a year, what is the expected revenue per car (rounded to the nearest dollar) that has to be made in order to break even in the first year?
a. $4,308
b. $7,179
c. $5,385
d. $10,769
e. $3,590

Answer 1

$7,179

Explanation:

Answer 2

The correct answer for the question that is being presented above is this one: "b. $7,179." A businessman bought a car dealership that is incurring a loss of $500,000 a year. He decided to strategize in order to turn the business around. In addition to the $500,000 annual loss, his fixed cost for running the dealership on a monthly basis is $5,000.