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1. A young entrepreneur is considering going into the vending machine business. He plans to buy six soft drink vending machines (VM) to locate in
1. A young entrepreneur is considering going into the vending machine business. He plans to buy six soft drink vending machines (VM) to locate in the six halls of residence on Morgan State University Campus. Each VM costs five hundred dollars ($500). In order to use the spaces he has to pay the Office of Residence Life (ORL) two hundred and fifty dollars ($250) every month. He hopes to borrow money to buy the VM and an additional one thousand ($1000.00) as working capital to buy cases of soda from the Bank at 12% interest rate and payback one thousand dollars ($1000) annually. He estimates that he would spend two hundred and fifty ($250) every two years on maintenance of the VM. The cost of each soft drink is twenty-five cents (25 cent). Assuming that the VM becomes obsolete in five years with a salvage value of fifty dollars ($50) for each VM, and he will sell one hundred and fifty (150) cans of soda every month from each VM assume equal number is sold from each VM. At what price in cents should he sell each can to break even. (Show your calculations) 1. A young entrepreneur is considering going into the vending machine business. He plans to buy six soft drink vending machines (VM) to locate in the six halls of residence on Morgan State University Campus. Each VM costs five hundred dollars ($500). In order to use the spaces he has to pay the Office of Residence Life (ORL) two hundred and fifty dollars ($250) every month. He hopes to borrow money to buy the VM and an additional one thousand ($1000.00) as working capital to buy cases of soda from the Bank at 12% interest rate and payback one thousand dollars ($1000) annually. He estimates that he would spend two hundred and fifty ($250) every two years on maintenance of the VM. The cost of each soft drink is twenty-five cents (25 cent). Assuming that the VM becomes obsolete in five years with a salvage value of fifty dollars ($50) for each VM, and he will sell one hundred and fifty (150) cans of soda every month from each VM assume equal number is sold from each VM. At what price in cents should he sell each can to break even. (Show your calculations)
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