Question: Your R&D group has developed and tested a computer software package that helps engineers control the proper chemical mix for various process-manufacturing industries. If you

Your R&D group has developed and tested a computer software package that helps engineers control the proper chemical mix for various process-manufacturing industries. If you decide to market the software, your first-year operating net cash flow is estimated to be $1,200,000. Because of market competition, product life will be about four years, and the product's market share will decrease by 25% each year over the previous year's share. You are approached by a big software house which wants to purchase the right to manufacture and distribute the product. Assuming that your interest rate is 15%, for what minimum price would you be willing to sell the software?

Step by Step Solution

★★★★★

3.53 Rating (170 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

PW 15 A 1 200 000P ... View full answer

Question Has Been Solved by an Expert!

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

Step: 2 Unlock

Step: 3 Unlock

Document Format (1 attachment)

891-B-A-F-A (2380).docx

120 KBs Word File

Students Have Also Explored These Related Accounting Questions!

Your firm must decide if and when to replace an existing machine. Consider the following information. Defender: The defender has a current market value of $12,000. Its operating costs over the next...

You, CA, are employed at Beaulieu & Beauregard, Chartered Accountants. On November 20, 20X5, Domenic Jones, a partner in your firm, sent you the following email: Our firm has been reappointed...

You are the manager of a franchise operating division of the Kwik-Copies Company. Your company evaluates your division using ROI, computed with end-of-year gross asset balances, and calculates...

Your R&D group has developed and tested a computer software package that helps engineers control the proper chemical mix for various process - manufacturing industries. If you decide to market the...

Your R&D group has developed and tested a computer software package that assists engineers to control the proper chemical mix for the various process-manufacturing industries. If you decide to market...

Read, analyze and explain the following article: make a essay, presenting your analysis of the pricing strategy used in this article. Explain the importance of the presented pricing strategy....

Answer the question based on the following case: Q) A) Evaluate each of the four vendors based on the criteria (functionality, IT technology and architecture, Price, company longevity and viability)...

CHA P TER 9 Understanding Software: A Primer for Managers 1. INTRODUCTION L E A R N I N G O B J E C T I V E S 1. Recognize the importance of software and its implications for the rm and strategic...

Following up on the previous problem, SoftBus believes its profit from each prospective customer depends on the customers level of PC knowledge. It divides the customers into three classes: PC-savvy,...

-0.2t C(t) = 120(e A study shows that the concentration C(t) (in micrograms per milliliter) of antibiotic in a patient's blood serum after t hours is ebt), where b 1 is a constant that depends on the...

Ryan wants to invest in shares on the ASX. His goal is to purchase shares that are very liquid. Ryan gathers ASX trading information for the following four shares. Assume that all four shares trade...

22. Suppose that you were going to conduct a survey of visitors to your campus. You want the survey to be as representative as possible. (a) How would you select the people to survey? (b) Why would...

H-Robotic Incorporated (HRI), a world leader in the robotics industry, produces a line of industrial robots and peripheral equipment that performs many routine assembly-line tasks. However, increased...

An electric utility company is taking bids on the purchase, installation, and operation of microwave towers: Which is the most economical bid if the interest rate is 11%? Both towers will have no...

Consider the following cash flows for two types of models: Both models will have no salvage value upon their disposal (at the end of their respective service lives). The firms MARR is known to be...

Please show work or you will not get 5 stars! The common stock of Modern Interiors has a beta of 1.61 and a standard deviation of 27.4 percent. The market rate of return is 13.2 percent and the...

Themeanincomeperpersonin...

the internal Revenue Service reports that the federal government income tax paid in 2010 was 8040. assume standard deviation is 4800. the urs plans to draw 1000 samples. I NEED STEPS NOT SURE HOW TO...