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Nadine Chelesvig has patented her invention. She is offering a potential manufacturer two contracts for the exclusive right to manufacture and market her product. Plan A calls for an immediate single lump sum payment to her of $170,000. Plan B calls for an annual payment of $14,000 plus a royalty of $1.60 per unit sold. The remaining life of the patent is 10 years. Nadine uses a MARR of 10%/year. What must be the uniform annual sales volume of the product for Nadine to be indifferent between the contracts, based on an annual worth analysis? units

Nadine Chelesvig has patented her invention. She is offering a potential manufacturer two contracts for the exclusive right to manufacture and market her product. Plan A calls for an immediate single lump sum payment to her of $170,000. Plan B calls for an annual payment of $14,000 plus a royalty of $1.60 per unit sold. The remaining life of the patent is 10 years. Nadine uses a MARR of 10%/year. What must be the uniform annual sales volume of the product for Nadine to be indifferent between the contracts, based on an annual worth analysis? units

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Nadine Chelesvig has patented her invention. She is offering a potential manufacturer two contracts for the exclusive right to manufacture and market her product. Plan A calls for an immediate single lump sum payment to her of $170,000. Plan B calls for an annual payment of $14,000 plus a royalty of $1.60 per unit sold. The remaining life of the patent is 10 years. Nadine uses a MARR of 10%/year. What must be the uniform annual sales volume of the product for Nadine to be indifferent between the contracts, based on an annual worth analysis? units
Transcribed Image Text:Nadine Chelesvig has patented her invention. She is offering a potential manufacturer two contracts for the exclusive right to manufacture and market her product. Plan A calls for an immediate single lump sum payment to her of $170,000. Plan B calls for an annual payment of $14,000 plus a royalty of $1.60 per unit sold. The remaining life of the patent is 10 years. Nadine uses a MARR of 10%/year. What must be the uniform annual sales volume of the product for Nadine to be indifferent between the contracts, based on an annual worth analysis? units
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