Paul plans to launch his own guitar company where he plans to make guitars from locally sourced materials using local labor. He has considered a variety of options including outsourcing the manufacturing but believes he can do it with the following structure cost of production or cost of goods sold $75/guitar. He has managed to raise $100,000 in capital from friends, family, and angel investors.

His close friend who gave him more than 50% of the money asks him at what price will he be selling the guitars. Paul responds flippantly $100+/-per guitar, believing that he will be making profit.


His friend is astute and says "That is great, but when will you break even and when can we who have invested in your shop start seeing some of our capital investment back?" How many guitars does Paul need to sell to break even?