A manufacturer offers an inventor the choice of two contracts for the right to manufacture and...
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A manufacturer offers an inventor the choice of two contracts for the right to manufacture and sell the inventor's patented design. According to Plan I, the inventor would receive an immediate single payment of $40,000. Under Plan II, the inventor would receive an annual payment of $2,500 plus a royalty of $1.25 for each unit sold. The remaining life of the patent is 7 years. MARR is 10% per year. What must be the uniform annual sales to make Plan I and Plan II equally attractive? A manufacturer offers an inventor the choice of two contracts for the right to manufacture and sell the inventor's patented design. According to Plan I, the inventor would receive an immediate single payment of $40,000. Under Plan II, the inventor would receive an annual payment of $2,500 plus a royalty of $1.25 for each unit sold. The remaining life of the patent is 7 years. MARR is 10% per year. What must be the uniform annual sales to make Plan I and Plan II equally attractive?
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Answer rating: 100% (QA)
To determine the uniform annual sales that would make Plan 1 and Plan 2 equally attractive we need to calculate the net present value NPV of each plan ... View the full answer
Related Book For
Smith and Roberson Business Law
ISBN: 978-0538473637
15th Edition
Authors: Richard A. Mann, Barry S. Roberts
Posted Date:
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