Nadine Chelesvig has patented her invention. She is offering a potential manufacturer two contracts for the exclusive right tomanufacture and market her product. Plan A calls for an immediate single lump sum payment to her of $170,000. Plan B calls for anannual payment of $14,000 plus a royalty of $1.60 per unit sold. The remaining life of the patent is 10 years. Nadine uses a MARR of10%/year. What must be the uniform annual sales volume of the product for Nadine to be indifferent between the contracts, based onan annual worth analysis?units

Annual worth, in economics, refers to a method used to evaluate the financial desirability of an…

Answered: Nadine Chelesvig has patented her…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Problem 02.038 - Calculation of unknown base cash flow The future worth in year 10 of an arithmetic gradient cash flow series for years 1 through 10 is $600,000. If the gradient increase each year, G, is $1500, determine the cash flow in year 1 at an interest rate of 11% per year. The cash flow in year 1 is $
Nadine Chelesvig has patented her invention. She is offering a potential manufacturer two contracts for the exclusive right to manufacture and market her product. Plan A calls for an immediate single lump sum payment to her of $175,000. Plan B calls for an annual payment of $14,000 plus a royalty of $3.90 per unit sold. The remaining life of the patent is 10 years. Nadine uses a MARR of 10%/year. What must be the uniform annual sales volume of the product for Nadine to be indifferent between the contracts, based on an units annual worth analysis? Carry all interim calculations to 5 decimal places and then round your final answer to the nearest unit. The tolerance is ±10.
Neighboring parishes in Louisiana have agreed to pool road tax resources already designated for bridge refurbishment. At a recent meeting, the engineers estimated that a total of $500,000 will be deposited at the end of next year into an account for the repair of old and safety-questionable bridges throughout the area. Further, they estimate that the deposits will increase by $100,000 per year for only 9 years thereafter, then cease. Determine the equivalent (a) present worth and (b) annual series amounts, if public funds earn at a rate of 5% per year. Draw the cash flow diagram and show complete solution. Make it clear ty
Mitchell Manufacturing purchased new material handling equipment for $28,000,000. The annual maintenance cost for the equipment will be $1,500,000. Mitchell Mfg. expects to generate extra annual revenue of $5,000,000 per year. The payback period to make a return of 8% per year is closest to: O 6 years O 11 years 13 years O 7 years O 9 years
Problem 03.015- Annual worth calculations Improvised explosive devices (IEDs) are responsible for many deaths in times of strife and war. Unmanned ground vehicles (robots) can be used to disarm the IEDs and perform other tasks as well. If the robots cost $125,000 each and the military arms unit signs a contract to purchase 4,000 of them now and another 7,500 one year from now, what is the equivalent annual cost of the contract over a 8.00-year period at 12.00% per year interest? (Round the final answer to three decimal places.) The equivalent cost of the contract is determined to be $
The city's Public Works Department must decide between two water purification systems. The cost of system 1 is known and is provided in the table. The cost of chemicals for system 2 is unknown. System 2 uses chemicals at a rate of 58400 pounds per year. At what price (dollars per pound) of chemicals for system 2 are the two options equivalent? Interest rate is 6%, and the analysis period is 20 years. Solve using annual cash flow analysis. Initial cost Annual Chemical Cost Lifetime (years) Part 1 System 1 322000 45000 20 Sysetm 2 539000 Unknown 20 At what price (dollars per pound) of chemicals for system 2 are the two options equivalent? number (rtol-0.01, atol=0.02) 27

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