Question: A software firm has completed a new App. They expect it will earn them around $1.3 million per year, for maybe five years, at which

A software firm has completed a new App. They expect it will earn them around $1.3 million per year, for maybe five years, at which point it will probably lose appeal and not earn much at all after that. If interest rates are expected to be around 8% during that period

a) How much will the earnings be worth in todays dollars?

b) Will the earnings justify the $5.5 million they have spent developing it?

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Accounting Questions!

When Completing the questions please list what type of question it is and name what is given in the question and what needs found. a. Youre pretty good illustrator with a pen and paper and your...

can you show how to do this using the present value/future value tables and a timeline ? 6. A software firm has completed a new App. They expect it will earn them around $1.3 million per year, for...

Turn in with an Excel file with your calculations and a report Chard Appliance (B) Exhibit 2: Chard Appliance Sales by State: 2003 Chard Appliance, located in Wichita, Kansas was founded in 1938 as...

i am taking Cooperate finance which is FIN222 can help me to answer.. ? Tutorial 1 Topic 1 Chapter 1 4. What are the main advantages and disadvantages of organising a firm as a corporation? 6. You...

I need help from a Financial expert who is very familiar with exchange rate exposure & payout policy.I will adjust the price as you suggest. For some reason I am not able to do it here. Please be...

I need help with writhing a financial statement analysis report about Company Sprint Airline. I have attached the documents including the overview of the project and the template of it and example of...

v Dr. Uma Kotagal, Senior Vice President (SVP) of Quality and Transformation, reflected on the beehive of improvement activity under way in 2009 at the Cincinnati Children's Hospital Medical Center...

Management must understand what needs to change. A culture of performance excellence is very different from a traditional management culture. Many traditional practices stem from the fundamental...

Cobweb the following discrete-time dynamical systems for three steps starting from the given initial condition. Compare with the solution found earlier. vt+1 = l.5vt starting from v0 = 1220m3 For...

What is the difference between a hierarchical structure and a chain-type structure in a classification and coding scheme?

Identify and explain the three types of classifications for investment in debt securities .

It is during sprint planning that the team must agrees upon the definition of "done." True False

1. Many inspirational speakers attempt to take the audience on an emotional journey. They try to erase cynicism and complacency and get employees fired up about their jobs. Do you think organizations...

2. Your goals play a key role in bringing purpose and direction to your life. Identify the short-term goals that are currently influencing your behavior. What long-term goals do you hope to achieve...

2. Lets assume you are a member of a productive team that has received considerable praise from top management. You learn that one member of the team has met with the manager who organized the team...