Two contracts for the exclusive right to manufacture

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Reference no: EM131025711

A manufacturer offers an inventor the choice of two contracts for the exclusive right to manufacture and market the inventor’s patented design. Plan 1 calls for an immediate single payment of $261464. Plan 2 calls for an annual payment of $14790 plus a royalty of $2.49 for each unit sold. The remaining life of the patent is 10 years. MARR is 8% per year.

How many units must be sold each year to make Plan 1 and Plan 2 equally attractive?

Reference no: EM131025711

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