Oscar Inc. has a new product priced at $650 per unit. Variable cost is $350 per...

Oscar Inc. has a new product priced at $650 per unit. Variable cost is $350 per unit, and fixed costs are $300,000 per year. Quantity sold is expected to be 15,000 units per year. The new product will require an initial investment of $16 million, depreciation will be straight-line to zero for eight years, and salvage at the end of eight years is expected to be $2 million. Demand for the product is expected to be stable and to continue for eight years. The required rate of return on this new product line is 12%. Ignoring taxes, what is the financial break-even quantity?

Select one:

a. 11,000

b. 11,194

c. 17,667

d. 18,800

e. 20,000

Expert Solution

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