What is the break even number of deliveries per month

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Question: You and one of your classmates are considering setting up a prescription delivery service for local residents in Mount Pearl. In order to start the business you will need to purchase a car for $6,700 which you expect you will be able to sell for $2,800 at the end of every two years (you'll have to purchase a new equivalent car at that time). Insurance costs are $570 for each six months of operation, starting immediately, and advertising costs (flyers, newspaper ads, etc.) are estimated to be $110 per month.

All calculations are performed using 4 significant figures.

The big question is how many customers you will have, but you figuring on setting a fee of $2 per delivery, which will be payable by your clients at the end of each month.

Assuming a stable interest rate of 10% per year, compounded monthly what is the break even number of deliveries per month?

Reference no: EM132761447

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