Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Consider the following investment offers regarding a product you have recently developed. A 10% interest rate should be used throughout this analysis unless otherwise specified:
Consider the following investment offers regarding a product you have recently developed. A 10% interest rate should be used throughout this analysis unless otherwise specified: Offer () Receive $0.57m now and $191k from year 6 through 15. Also, if your product achieved over $100 million in cumulative sales by the end of year 15, you would receive an additional $3m. Assume that there is a 70% probability this would happen Offer (I) Receive 30% of the buyer's gross profit on the product for the next 4 years. Assume that the buyer's gross profit margin is 60%. Sales in year 1 are projected to be $2m and then expected to grow by 40% per year. Offer (II) - A trust fund would be set up, calling for semiannual payments of $202k for 8 years. On the 17th period, you would receive the compounded proceeds, which would then be discounted over the 8-year period back to the present at the specified annual rate. Note: The term "*" is used to represent thousands ( $1,000). Required: Determine the percentage difference between your most and least profitable alternatives, with the least profitable option as the basis for your calculation. % Intermediate calculations must be rounded to 3 decimal places (at least). Input your answer as a percent rounded to 2 decimal places (for example: 28.31%). Consider the following investment offers regarding a product you have recently developed. A 10% interest rate should be used throughout this analysis unless otherwise specified: Offer () Receive $0.57m now and $191k from year 6 through 15. Also, if your product achieved over $100 million in cumulative sales by the end of year 15, you would receive an additional $3m. Assume that there is a 70% probability this would happen Offer (I) Receive 30% of the buyer's gross profit on the product for the next 4 years. Assume that the buyer's gross profit margin is 60%. Sales in year 1 are projected to be $2m and then expected to grow by 40% per year. Offer (II) - A trust fund would be set up, calling for semiannual payments of $202k for 8 years. On the 17th period, you would receive the compounded proceeds, which would then be discounted over the 8-year period back to the present at the specified annual rate. Note: The term "*" is used to represent thousands ( $1,000). Required: Determine the percentage difference between your most and least profitable alternatives, with the least profitable option as the basis for your calculation. % Intermediate calculations must be rounded to 3 decimal places (at least). Input your answer as a percent rounded to 2 decimal places (for example: 28.31%)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started