3 Newton Electronics Ltd could sell the patent rights to Faraday Electricals plc for 24m, payable in

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3 Newton Electronics Ltd could sell the patent rights to Faraday Electricals plc for £24m, payable in two equal instalments. The first instalment would be payable immediately and the second at the end of two years. This option would give Faraday Electricals the exclusive right to manufacture and market the new product.

Ignore taxation.

Required:

(a) Calculate the net present value of each of the options available to Newton Electronics Ltd.

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Accounting An Introduction

ISBN: 9780273711360

4th Edition

Authors: Harvey, Jenner Atrill, McLaney

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