You have been issued a patent giving you exclusive rights to sell a new type of software. You believe the patent will produce sales $198,000 each year as long as the software remains in demand. Assume a discount rate of 4% compounded annually. What is the value today of having the patent, assuming sales last for (a) three years, (b) four years, or (c) five years? (FV of $1. PV of $1. FVA of $1. and PVA of $1) (Use tables, Excel, or a financial calculator. Round your answers to 2 decimal places.) a b. C Annuity Payment $198.000 198,000 198,000 Annual Rate Interest Compounded 4% Annually 4% Annually Annually Period Invested 3 years 4 years 5 years Present Value of Annuity
You have been issued a patent giving you exclusive rights to sell a new type of software. You believe the patent will produce sales $198,000 each year as long as the software remains in demand. Assume a discount rate of 4% compounded annually. What is the value today of having the patent, assuming sales last for (a) three years, (b) four years, or (c) five years? (FV of $1. PV of $1. FVA of $1. and PVA of $1) (Use tables, Excel, or a financial calculator. Round your answers to 2 decimal places.) a b. C Annuity Payment $198.000 198,000 198,000 Annual Rate Interest Compounded 4% Annually 4% Annually Annually Period Invested 3 years 4 years 5 years Present Value of Annuity
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:You have been issued a patent giving you exclusive rights to sell a new type of software. You believe the patent will produce sales of
$198,000 each year as long as the software remains in demand. Assume a discount rate of 4% compounded annually. What is the
value today of having the patent, assuming sales last for (a) three years, (b) four years, or (c) five years? (EV of $1. PV of $1. FVA of $1.
and PVA of $1) (Use tables, Excel, or a financial calculator. Round your answers to 2 decimal places.)
a
b.
G.
Annuity Annual
Payment Rate
$ 198,000
198,000
198,000
4%
Interest
Compounded
Annually
Annually
Annually
Period
Invested:
3 years
4 years
5 years
Present Value of
Annuity
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