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A Businessman Is Considering How Many Limousines to Purchase When

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A businessman is considering how many limousines to purchase when he starts up a limousine service.Below are his estimates of the number of limousine rentals the service will make during a year,depending on the number of limousines available. A businessman is considering how many limousines to purchase when he starts up a limousine service.Below are his estimates of the number of limousine rentals the service will make during a year,depending on the number of limousines available.   After paying all non-interest expenses,the owner expects to net $10 per rental.Each limousine costs $50,000.How many limousines should he purchase if the real interest rate is 5.5%? A)  0. B)  1. C)  2. D)  3. E)  4.
After paying all non-interest expenses,the owner expects to net $10 per rental.Each limousine costs $50,000.How many limousines should he purchase if the real interest rate is 5.5%?


Definitions:

Discount

A fee charged when someone buys a note before maturity. With regard to bonds, a bond sells at a discount if the market value becomes less than the face value.

Premium Price

A pricing strategy where goods or services are sold at a higher price point due to perceived advantages, often related to quality or status.

Bond Quoted

The price or interest rate at which a bond is currently being sold or bought in the market.

Dollar Amount

A numerical monetary value denoted in the currency of the United States.

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