Question: Dududemon Inc. keeps getting tangled up in costly IP litigation because it is supposedly infringing on Mr. East's patented leather jeggings. The CEO of Dududemon

Dududemon Inc. keeps getting tangled up in costly IP litigation because it is supposedly infringing on Mr. East's patented leather jeggings. The CEO of Dududemon is confident that they will win the case, but the firm is spending $1 million per year on this litigation and it will go on for 4 more years. The interest rate is 5%.

Suppose Dududemon wants to stop dealing with the distraction, how much would Dududemon have to pay an external firm to take full responsibility of the case?

Assume that Dududemon's legal department is as equally productive as an outside firm and that the market for outside legal help is perfectly competitive. Also assume that the payment for legal services will be made at the beginning of each year.

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