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 $241,000 each year as long as the software remains in demand. Assume a discount rate of 4% compounded annually and payments are made at the end of each year. What is the value today of having the patent, assuming sales last for (a) three years, (b) four years, or (c) five years? Note: Use tables, Excel, or a financial calculator. Round your answers to 2 decimal places. (FV of $1. PV of $1. FVA of $1. and PVA of $1)
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 $241,000 each year as long as the software remains in demand. Assume a discount rate of 4% compounded annually and payments are made at the end of each year. What is the value today of having the patent, assuming sales last for (a) three years, (b) four years, or (c) five years? Note: Use tables, Excel, or a financial calculator. Round your answers to 2 decimal places. (FV of $1. PV of $1. FVA of $1. and PVA of $1)
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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Vikrambhai
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 $241,000 each year as long as the software remains in demand. Assume a discount rate of 4%
compounded annually and payments are made at the end of each year. What is the value today of having the patent,
assuming sales last for (a) three years, (b) four years, or (c) five years?
Note: Use tables, Excel, or a financial calculator. Round your answers to 2 decimal places. (FV of $1, PV of $1, FVA of $1.
and PVA of $1)
a.
b.
C.
Annuity
Payment
$ 241,000
241,000
241,000
Annual
Rate
4%
4%
4%
Interest
Compounded
Annually
Annually
Annually
Period
Invested
3 years
4 years.
5 years
Present Value of
Annuity
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