Question

please help me solve this problem!

Andrew has decided to open an online store that sells home and garden products. After searching around, he chooses the software company Initech to provide the software for his website since their product required the least amount of specialized investments for him to use it. They agreed upon price of $6,000. To use Initech’s software, Andrew makes $3,500 in sunk capital investments and spends 40 hours learning how to use Initech’s software, which is very different from other software packages. Both Andrew and Initech view Andrew’s time as worth $28 per hour and Initech is fully aware of the investments Andrew must make to use their product. After Andrew’s investments were made, Initech came to Andrew and asked for more money.

What do you think is the new price Initech requested Andrew to pay?

Answer 1

The investments done by Andrew are = $3500+6000+28*40= $3500+6000+1120=$10620

Now we are also given that the agreed upon price is $6000

So the more money Initech has asked from Andrew is $10620-$6000=$4620

The total price Initech requested was $10620 and the new or the additional price is $4620