Question

Jim decides to start a small nonprofit business of renting out motor scooters to help out his area residents. He puts in his own money and buys 5 motor scooters, each priced at $3,000. He incurs no other costs because he keeps the motor scooters in his own garage. The motor scooters last for 5 years. The number of motor scooters and the probability that they would be rented per month is shown in the table.

At what price per month should Jim rent out a scooter in order to break even in five years?
A.
$50
B.
$100
C.
$150
D.
$200
E.
$250

Answer 1

Jim should rent out a scooter for $250 per month in order to break even in five years.

Therefore, the correct answer is $250 (Option E).

Step-by-step explanation:

To calculate the price per month that Jim should rent out a scooter in order to break even in five years, we need to consider the number of months in five years and the total cost of purchasing the scooters.

Jim bought 5 motor scooters priced at $3,000 each, so the total cost is $3,000 * 5 = $15,000.

Since the scooters last for 5 years, there are 5 * 12 = 60 months in total.

To break even, Jim needs to cover the cost of $15,000 in 60 months, so the price per month should be

$15,000 / 60

= $250.