Question
Nike was sued by Adidas for infringing on their patented running shoes. The CEO of Nike is confident that they will win the case, but
Nike was sued by Adidas for infringing on their patented running shoes. The CEO of Nike is confident that they will win the case, but the firm is spending $1 million per year on this litigation and it will go on for 4 more years. The interest rate is 5%. Suppose Nike wants to stop dealing with the distraction, how much would Nike have to pay an external firm to take full responsibility of the case? Assume that Nikes legal department is as equally productive as an outside firm and that the market for outside legal help is perfectly competitive. Also assume that the payment for legal services will be made at the beginning of each year.
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