Annual royalty for rights

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Reference no: EM131809534

What must the annual royalty for rights to use a new invention be to justify proceeding with development? The development period will be 2 years, with $650K to be spent at the beginning of each year. The firm expects the royalty period to be only 5 years due to the pace of technological development. Royalties would be received at the ends of years 3 to 7. The firm uses an interest rate of 20% to evaluate R&D projects.

Reference no: EM131809534

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