Question: Any help with this question would be great :) [10] Company A keeps getting tangled up in costly IP litigation because it is supposedly infringing
Any help with this question would be great :)
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[10] Company A keeps getting tangled up in costly IP litigation because it is supposedly infringing on Company B's patented hand-sanitizer design. The CEO of Company A is confident that they will win the case, but the firm is spending 51 million per year on this litigation and it will go on for 5 more years. The interest rate is 5%. Suppose Company A wants to stop dealing with the distraction, how much would it have to pay an external firm to take full responsibility of the case? Assume that Firm A's legal department is equally productive to an outside firm and that the market for outside legal help is perfectly competitive. Finally, assume that the payment for legal services will be made at the beginning of each year. (Hint: You need to calculate a net present value.)
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