Question

ARROW BACK Questions Cullumber Company signs a contract to sell the use of its patented manufacturing technology to Bramble Corp. for 14 years. The contract for this transaction stipulates that Bramble Corp. pays Cullumber $17,500 at the end of each year for the use of this technology. Using a discount rate of 8%, what is the value in use of the patented manufacturing technology? (For calculation purposes, use s decimal places as displayed in the factor table provided. Round final answer to 2 decimal places, ag. 5,275.25.) Check here to view the factor table PRESENT VALUE OF Click here to view the factor table PRESENT VALUE OF AN ANNUITY OEL Value in use

Answer 1

Solution:

Value of patent = Present value of all cash flows

= Cumulative present value factor (8%, 14 years) * $17,500

= 8.24424 * $17,500

Value of patent = $144,274.20

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