Question: Your client is a biochemist who has discovered a technique to create a new biofuel. He estimates it will take him 2 years to make

Your client is a biochemist who has discovered a technique to create a new biofuel. He estimates it will take him 2 years to make it economically feasible at a cost of $2,000,000. He expects he has an 80% chance at success; if so, he expects to be able to sell the patents for $10,000,000. Assume that all of the costs incurred were capitalized as costs of the patent, he has a combined federal and state tax rate of 30% and he has an expected rate of return of 8%. What is the present value of his expected payoff?

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