What must be the uniform annual sales volume of the product for Nadine to be indifferent between the contracts, based on a present worth analysis?

Nadine Chelesvig has patented her invention. She is offering a patent manufacturer two contracts for the exclusive right to manufacture and market her product. Plan A calls for an immediate single lump payment to her of $27,000. Plan B calls for an annual payment of $900 plus a royalty of $0.48 per unit sold. The remaining life of the patent is 10 years. Nadine uses a MARR of 11 %/year.

a. What must be the uniform annual sales volume of the product for Nadine to be indifferent between the contracts, based on a present worth analysis?

Solutions

Expert Solution

The image below contains the formula behind the cells:

This will finally look like this :

Now the final step is to run the goal seek function, set pw of plan b to 27000(pw of A) by changing cell of units sold

now click OK and cell B12 is your answer (the number of units to be sold)

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Rahul Sunny answered 1 year ago

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