Receiving much less media attention from the previous case, the newly chosen CFO of Retro Max (RM) was thrilled with the response received from drug companies for the latest discovery, a unique electronic stimulator that reduces the pain from arthritis. While the process had yet to pass Federal Drug Administration (FDA) testing and was in the mid-stages of development, excitement from the investment community extreme. RM received the three proposal described in the following paragraph. (Use a 10% interest rate throughout this analysis unless otherwise specified.)

Proposal2: Thirty percent of the buyer's gross profit on the product for the next four years. The buyer in this case was Amce Pharmaceutical. Amces gross profit margin was 60%. Sales in year one were projected to be $2 million and then expected to grow by 40% per year.

Determine the present value of the trust fund's final value.

Required: Find the present value of each of the three offers and indicate which one has the highest present value. (Show and label all calculations.)

Determine the present value of the trust fund's final value.

Required: Find the present value of the offer/ proposal (Show and label all calculations.)