Juan is making birdhouses

 so his tools and stuff cost $80 and 6.25 PER BIRD HOUSE.
To make a profit he needs to make more that 80 and 6.25+.  And he'll sell the bird houses for $16.
So we'll multiply.  16x (blank)=.  And make it more than 80. 
Step 2.
Let's say that you've got 5 bird houses.  Now you have to mutliply 6. 25 and 5 because Juan had to pay that extra 6.25 per bird house.

The first option would be correct if it were one half and not one