The owner of a rental car company is trying to decide how many cars to buy. He has determined that the annual value of marginal product (P x MPK) of an additional car is approximated by: PxMPK = 5000 - 4xK, where K is the number of cars. A new car costs $20,000 and the interest rate on car loans is 5% per year and the depreciation rate of a car is 15% per year. (Assume 0 inflation so that 5% is also the real interest rate.) What is the optimal number of cars?

	1.	0
	2.	250
	3.	500
	4.	1,000
	5.	5