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I need some help with this question, My answer to question E) is 1880 pounds per year, can anyone suggest a different answer, also does anyone know how would I revise for questions of this type.

Give answers, where appropriate, to 1 decimal place.

Julia Parsons runs a small business hiring out canoes and pedaloes (pedal boats) in a seaside holiday resort during the summer months. The canoes and pedaloes are subjected to considerable “wear and tear”.

Julia’s “fleet” consists of

  • 10 single canoes (canoes for a single person)
  • 12 double canoes (canoes for 2 persons)
  • 12 pedaloes (pedal boats)
  • 2 large canoes (canoes for 4 persons)

The hiring costs per hour for these are,
Single £4;
Double £6;
Pedaloes £3;
Large £8

Julia has kept a record of usage over several years and assesses the total usage according to the following table.

Table 1 Number of occasions when canoe/pedalo is hired for the period shown

Due to the heavy “wear and tear” each pedalo has to be replaced every 3 years and each canoe every 5 years. Julia maintains a depreciation fund for this purpose and puts the same amount of money each year in to this fund. The costs for new are,
Single £200;
Double £230;
Pedaloes £150;
Large £400

(e) How much does Julia put in to the fund each year?

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    By my calculations the replacement cost averages £1712 a year: in a 15-year span she must replace 30 single canoes, 36 double canoes, 60 pedaloes, and 6 large canoes, at a total cost of £25680. Putting in £1712 a year is therefore a steady-state solution. However, it’s not enough starting from scratch, because at the end of 6 years she’s had to pay £12920 and has deposited only £10272.2012-02-18
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    Ignore that last sentence: the £12920 figure is wrong.2012-02-18
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    Table 1 is missing. . . How can we answer this if we don't know "number of occasions when canoe/pedalo is hired for the period shown"? That affects the answer entirely.2012-02-19

2 Answers 2