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 enthusiasts. 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? If the price were increased to $100 each, find the break-even volume.

2. For problem 1, suppose that sales are expected to be 100 units in the first year and in-crease at a rate of 40 percent per year. How many years will it take to recoup the $30,000 initial investment? Assume that each unit sells for $85.

Answer rating: 100% (QA)

A To calculate the number of units that must be sold to recover the initial investment you can use the following formula textBreakeven units fracIniti... View the full answer