Question: You are offered a three year distribution contract for a technology product with a short market life. Your initial costs for the rights to sell

You are offered a three year distribution contract for a technology product with a short market life. Your initial costs for the rights to sell the product are $2,500,000. Your first year net cash flow is estimated to be $3,400,000, after which it will decrease each year by 50% of the previous year’s net cash flow. You may assume that your interest rate for available investments is 9%.

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