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Cullumber Company signs a contract to sell the use of its patented manufacturing technology to Riverbed...

Cullumber Company signs a contract to sell the use of its patented manufacturing technology to Riverbed Corp. for 15 years. The contract for this transaction stipulates that Riverbed Corp. pays Cullumber $18,000 at the end of each year for the use of this technology. Using a discount rate of 10%, what is the value in use of the patented manufacturing technology? (For calculation purposes, use 5 decimal places as displayed in the factor table provided. Round final answer to 2 decimal places, e.g. 5,275.25.)

Click here to view the factor table PRESENT VALUE OF 1.
Click here to view the factor table PRESENT VALUE OF AN ANNUITY OF 1.

Value in use $enter the value in use in dollars $
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Answer #1

sol;

Payment to be received at the end of each year = $18,000

Present value annuity factor for 15 years @10% interest rate = 7.6061

Value in use = 18,000*7.6061 = $136,909.8

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