Pat Baldwin Owns and Operates Outstanding Quality Rentals (OQR)

question 25

Essay

Pat Baldwin owns and operates Outstanding Quality Rentals (OQR). OQR offers kayak rentals and shuttle service on the Petaholee River. Customers can rent kayaks at one station and enter the river there. They can then exit at one of two designated locations to catch a shuttle to return them to their vehicles. Following are the costs involved in providing this service each year. OQR began business three years ago with a $36,000 expenditure for a fleet of 50 kayaks. These are expected to last seven more years, at which time a new fleet will be purchased. Pat is satisfied with the steady average rentals per year of 9,900.
Required:
What price should Pat charge per rental for the business to make a thirty percent life cycle profit?

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Definitions:

Data File

A digital file that stores data to be used by a computer application or system.

QuickBooks

Accounting software that provides tools for managing invoices, expenses, employees, and reports for small to medium businesses.

Transactions

Financial events that result in changes to the accounts of a business.

Chart of Accounts

An organized list of all accounts in a business's general ledger, categorizing assets, liabilities, equity, revenue, and expenses.