A rental car agency rents cars for an average price of $45/day. The number of cars owned in 2020 totals 150. The number of days rented per car in 2020 equals 200. Hence, the rental revenue in 2020 totals $45(150) (200), or $1,350,000. If the agency increases the number of cars at an annual rate of 10%, the number of days rented per car each year remains constant, and the average rental rate increases 5%/year due to inflation, what is the present worth of rental income in 2025 if the agency’s real MARR is 10%? (Allow for a fractional valued number of cars.)
A rental car agency rents cars for an average price of $45/day. The number of cars owned in 2020 totals 150. The number of days rented per car in 2020 equals 200. Hence, the rental revenue in 2020 totals $45(150) (200), or $1,350,000. If the agency increases the number of cars at an annual rate of 10%, the number of days rented per car each year remains constant, and the average rental rate increases 5%/year due to inflation, what is the present worth of rental income in 2025 if the agency’s real MARR is 10%? (Allow for a fractional valued number of cars.)
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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A rental car agency rents cars for an average price of $45/day. The number of cars owned in 2020 totals 150. The number of days rented per car in 2020 equals 200. Hence, the rental revenue in 2020 totals $45(150) (200), or $1,350,000. If the agency increases the number of cars at an annual rate of 10%, the number of days rented per car each year remains constant, and the average rental rate increases 5%/year due to inflation, what is the present worth of rental income in 2025 if the agency’s real MARR is 10%? (Allow for a fractional valued number of cars.)
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