Question
Your R&D group has developed and tested a computer software package that assists engineers to control the proper chemical mix for the various process-manufacturing industries.
Your R&D group has developed and tested a computer software package that assists engineers to control the proper chemical mix for the various process-manufacturing industries. If you decide to market the software, your first-year operating net cash flow is estimated to be $1,000,000. Because of market competition , product life will be about 4 years, and product market share will decrease by 25% each year over the previous year's share. You are approached by a big software house which wants to purchase the right to manufacture and distribute the product. Assuming that your interest rate is 15%, for what minimum price would you be willing to sell the software?
Please show work
Choices are
a. | $1,458,998 | |
b. | $1,116,509 | |
c. | $2,047,734 | |
d. | $2,346,98 |
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