An inventor was offered the following alternatives as royalties for his invention: a. A single lump sum payment of (x = Php 310,000) for the right to manufacture the invention for the next 5 years. b. An initial payment of “ 2/7 x” and year-end payments as follows: End of Year Royalty Payment 1 0 2 1/7x 3 2/7x 4 3/7x 5 4/7x If money is worth 15% to the inventor, which alternative is better for him?
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An inventor was offered the following alternatives as royalties for his invention:
a. A single lump sum payment of (x = Php 310,000) for the right to manufacture the invention for the next 5 years.
b. An initial payment of “ 2/7 x” and year-end payments as follows:
| End of Year | Royalty Payment |
| 1 | 0 |
| 2 | 1/7x |
| 3 | 2/7x |
| 4 | 3/7x |
| 5 | 4/7x |
If money is worth 15% to the inventor, which alternative is better for him?
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