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1. Nadine Chelesvig has patented her invention. She is offering a patent manufacturer two contracts for the exclusive right to manufacture and market her product.
1. Nadine Chelesvig has patented her invention. She is offering a patent manufacturer two contracts for the exclusive right to manufacture and market her product. Plan A calls for an immediate single lump payment to her of $30,000. Plan B calls for an annual payment of $1,050 plus a royalty of $0.60 per unit sold. The remaining life of the patent is 10 years. Nadine uses a MARR of 7 %/year. a. What must be the uniform annual sales volume of the product for Nadine to be indifferent between the contracts, based on a present worth analysis?
2.
A natural gas well is projected to produce $202,000 in profit during its first year of operation, $193,000 the second year, $184,000 the third year, and so on, continuing this pattern. If the well is expected to produce for a total of 10 years, and the effective annual interest rate is 11.5%, which of the following most closely represents the present worth of the well? O $1,403,000 $977,000 $1,148,000 $1,665,000
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