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

Total cost of the scooters = 5 • 3000
= 15000$
The months he has to earn from the 5 years rent = 5 • 12(months in a year)
= 60
15000/ 60
= 250$
In order to break even in five years Jim should rent out a scooter for the price of 250$