An inventor was offered the following alternatives as royalties for his invention: a. A single lump sum payment of (x = Php 310,000) for the right to manufacture the invention for the next 5 years. b. An initial payment of “ 2/7 x” and year-end payments as follows: End of Year Royalty Payment           1                   0                   2                 1/7x                   3                 2/7x                   4                 3/7x                    5                 4/7x If money is worth 15% to the inventor, which alternative is better for him?

Principles of Accounting Volume 1
19th Edition
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax
Chapter13: Long-term Liabilities
Section: Chapter Questions
Problem 1EA: Halep Inc. borrowed $30,000 from Davis Bank and signed a 4-year note payable stating the interest...
icon
Related questions
Question
100%

An inventor was offered the following alternatives as royalties for his invention:
a. A single lump sum payment of (x = Php 310,000) for the right to manufacture the invention for the next 5 years.

b. An initial payment of “ 2/7 x” and year-end payments as follows:

End of Year Royalty Payment
          1                   0
                  2                 1/7x
                  3                 2/7x
                  4                 3/7x 
                  5                 4/7x

If money is worth 15% to the inventor, which alternative is better for him?

Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 3 steps with 2 images

Blurred answer
Knowledge Booster
Mortgages
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.
Similar questions
Recommended textbooks for you
Principles of Accounting Volume 1
Principles of Accounting Volume 1
Accounting
ISBN:
9781947172685
Author:
OpenStax
Publisher:
OpenStax College
Principles of Accounting Volume 2
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
Financial Accounting Intro Concepts Meth/Uses
Financial Accounting Intro Concepts Meth/Uses
Finance
ISBN:
9781285595047
Author:
Weil
Publisher:
Cengage
Intermediate Accounting: Reporting And Analysis
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Individual Income Taxes
Individual Income Taxes
Accounting
ISBN:
9780357109731
Author:
Hoffman
Publisher:
CENGAGE LEARNING - CONSIGNMENT
CONCEPTS IN FED.TAX., 2020-W/ACCESS
CONCEPTS IN FED.TAX., 2020-W/ACCESS
Accounting
ISBN:
9780357110362
Author:
Murphy
Publisher:
CENGAGE L