Question: Lindow’s Limes invested $600,000 to develop a new
Lindow’s Limes invested $600,000 to develop a new, home seized lime juice machine. The variable costs were $30 per unit and fixed costs were $100,000. This project is expected to take 4 years to become marketable. The juice machines are expected to sell for $60 per package. The project’s cost of capital is 15%.
- a) What is the project’s financial break-even point in units?
- b) Once the juice machines have been on the market, people love them and there has been a 20% increase in sales. What is the percentage change in OCF after the first year of sales?
