Considering going into the vending machine business

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A young entrepreneur is considering going into the vending machine business. He plans to by five soft drink vending machine (VM) to locate in the five 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 dollars ($200) every month. He hopes to borrow money to buy the VM and additional one thousand ($1000.00) as working capital from the bank at 12% interest rate and payback one thousand dollars ($1000) annually. He estimates that he would spend two hundred ($200) every two years on maintenance of all five VM. The cost of each soft drink is twenty-five cents (25 cent) and the selling price is fifty cents (50 cents) Assuming that the VM becomes obsolete in five years with a salvage value of fifty dollars ($50) for each VM, how many soda cans of soda does he have to sell every month from each VM assume equal number is sold from each VM to break even. (To the nearest whole number)

Reference no: EM131722351

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