A manufacturer offers an inventor the choice of two contracts for the exclusive

Question

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 $260025. Plan 2 calls for an annual payment of $10046 plus a royalty of $2.02 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?

Round your answer (no decimal points) and do not include a comma (,).

Explanation / Answer

Let x be Unit to be sold

Solving This Equation we get Unit to be sold

hence unit to be sold = 14211 units

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