Frank Murphy Is Considering How Many Snowmobiles to Purchase for His

question 133

Multiple Choice

Frank Murphy is considering how many snowmobiles to purchase for his snowmobile rental business. Below are his estimates of the number of snowmobile rentals per year, depending on the number of snowmobiles available. After paying all non-interest expenses, expenses Frank expects to net $10 per rental. Each snowmobile costs $15,000. How many snowmobiles should Frank purchase if the real interest rate is 5.5%?

• A) 0.
• B) 1.
• C) 2.
• D) 4.

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Definitions:

Demand Curve

A graph illustrating the relationship between the price of a good and the quantity demanded by consumers at those prices, typically downward sloping.

Business-to-Business (B₂B)

Commercial transactions or engagements between two businesses, rather than between a company and individual consumers.

Bottom Line

The final line in a financial statement that shows net income or loss.

Buying Center

A group of individuals within an organization who participate in the decision-making process for purchasing products or services.