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A young entrepreneur is considering going into the vending machine business

Civil Engineering

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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
($5OO;. 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 ($1000.00) as working capital to buycases of
soda from the Bank at l2o/o interest rate and payback one thousand doll*s ($tOOO)
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
gent). 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 (156) cans of
soda every month from each vM assume equal number is sold from Lach vM. At
what price should he sell each can to break even.