What is the rate of return on the Jane advanced technology

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Question - Jane is an inventor, working for the ACME Gadget Company in research and development. She recently proposed the development of an advanced technology, but it was deemed too risky for R&D at ACME. However, ACME has agreed that if Jane successfully develops the technology on her own, ACME will acquire a license to use the technology for a period of 10 years. To develop the technology will require an initial expenditure of $150,000 and an additional expenditure of $150,000 at the end of each of the next 2 years. When the patent is approved in Year 4, it is expected to be licensed to the ACME Gadget Company for an upfront fee of 100,000 plus an additional fee of $90,000/year for 10 years. At that time the product that uses the technology will be replaced by a new model. What is the rate of return on the Jane's advanced technology?

Reference no: EM132546930

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