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.