5. The patent holder of a new invention, the Robovac (a robot vacuum cleaner), has offered to...

Question:

5. The patent holder of a new invention, the Robovac (a robot vacuum cleaner), has offered to sell you the patent. The patent lasts 5 years, and you expect that tooling up for production will cost 20 million but that this will earn you a profit of 10 million in the first year. You expect sales to be roughly the same in each year, but do not expect any profit after the 5 years are up. If your money discount rate is 15% and inflation is 4%, what is the maximum sum you would be willing to pay for the patent rights? (Assume the rates hold constant over the 5-year time interval.)

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Question Posted: