Problemoconnor optical invested 400000 to develop a new, Ask an Expert

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Problem:

O'Connor Optical invested $400,000 to develop a new contact lens tech. the variable costs were $65 per unit and fixed costs were $175,000. This project is expected to take 4 years to become marketable. The contacts are going to sell for $100 per package. The project's cost of capital is 12.5%.

Requirement:

Question 1: What is the financial break even point in units?

Question 2: If there is a 35% increase in sales, what is the percent change in OCF after the first year of sales?

Note: Please provide through step by step calculations.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91167156

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