Years ago, in order to reignite its growth in the U$.$ S$.,$ McDonald's offered an all$-$day, healthy breakfast menu$--$featuring Healthy Egg

McMuffins. As test marketed, that decision didn't meet their financial expectations, as it involved high re$-$tooling costs and the

addition of corporate overhead $($marketing$,$ R&D$).$ They've done market research since then and believe that a Healthy Egg McMuffin

can withstand a much higher price point. Using the following assumptions, what price could they charge and still meet their

financial goals:

Egg McMuffins now sell for $$4,$ and $100$ million of them are sold annually. Their unit cost is $$1$ each. Healthy Egg

McMuffins would cost a bit more $($$$1\mathrm{.}25)$ due to the cost of guacamole and organic eggs.

Assume the addition of Healthy McMuffins would result in annual sales of $125$ million, from $100$ million now.

Assume re$-$tooling costs and additional overhead costs would jump from $$20$ million now to $$31\mathrm{.}25$ million.

in Year $1,$ they are targeting to make $$500$ million related to the sales of Healthy Egg McMuffins.

What increase in price would be required to achieve that target in Year $1--$assuming a full write$-$off of the $$31\mathrm{.}25$ million in fixed

costs described above?

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