38. A start-up company, Macrotech, plans to produce a device to translate Morse code to a written message on a home computer and to send written messages in Morse code over the airwaves. The device is primarily of interest to ham radio enthusi- asts. The president, Ron Lodel, estimates that it would require a $30,000 initial investment. Each unit costs him $20 to produce and each sells for $85. a. How many units must be sold in order for the firm to recover its initial investment? b. What is the total revenue at the break-even volume? c. If the price were increased to $100 each, find the break-even volume.
38. A start-up company, Macrotech, plans to produce a device to translate Morse code to a written message on a home computer and to send written messages in Morse code over the airwaves. The device is primarily of interest to ham radio enthusi- asts. The president, Ron Lodel, estimates that it would require a $30,000 initial investment. Each unit costs him $20 to produce and each sells for $85. a. How many units must be sold in order for the firm to recover its initial investment? b. What is the total revenue at the break-even volume? c. If the price were increased to $100 each, find the break-even volume.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Transcribed Image Text:38. A start-up company, Macrotech, plans to produce a device to translate Morse code
to a written message on a home computer and to send written messages in Morse
code over the airwaves. The device is primarily of interest to ham radio enthusi-
asts. The president, Ron Lodel, estimates that it would require a $30,000 initial
investment. Each unit costs him $20 to produce and each sells for $85.
a. How many units must be sold in order for the firm to recover its initial
investment?
b. What is the total revenue at the break-even volume?
c. If the price were increased to $100 each, find the break-even volume.
Expert Solution
Step 1
Break-even volume is a situation in which there is no profit earned or no loss incurred. Means, total cost and total revenue will be same.
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