Frank Murphy Is Considering How Many Snowmobiles to Purchase for His

question 113

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 4.5%?

• A) 0.
• B) 1.
• C) 2.
• D) 4.

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