This may be a stupid question but why did you x6 when you calculate the price to achieved 30% profit margin?

Madflix.com
New answer on Apr 18, 2020
1 Answer
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Liora Katzew
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asked on Apr 18, 2020

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Vasily
Expert
updated an answer on Apr 18, 2020
Senior Consultant BCG New York, Sydney & Moscow | INSEAD & Wharton MBA |Official Interviewer | Time Flexible

Hi Liora,

Thanks for your question!

Upon a quick look, it seems that the Price is charged monthly, whereas the Cost is calculated per rental. As the Number of rentals per month is 6, you need to multiple the Cost by 6 to get to the Monthly Cost. So your monthly Profit is your Monthly Price minus Monthly Cost, hence:
Margin = (Price (monthly) - Cost (monthly)) / Price (monthly) = (Price - Cost per rental * Number of rentals) / Price = (Price - $1.75*6) / Price

Hope this helps!

Best regards,

Vasily

(edited)

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Liora Katzew on Apr 18, 2020
Thank you so much !