Your R&D group has developed and tested a computer software package that assists engineers to control the proper chemical mix for the various process manufacturing industries. If you decide to market the software, your ï¬rst year operating net cash ï¬‚ow is estimated to be $1,000,000. Because of market competition, product life will be about 4 years, and the productâ€™s market share will decrease by 25% each year over the previous yearâ€™s share. You are approached by a big software house which wants to purchase the right to manufacture and distribute the product. Assuming that your interest rate is 15%, for what minimum price would you be willing to sell the software?

Your R&D group has developed and tested a computer software package t

1.	Your R&D group has developed and tested a computer software package that assists engineers to control the proper chemical mix for the various process manufacturing industries. If you decide to market the software, your ï¬rst year operating net cash ï¬‚ow is estimated to be $1,000,000. Because of market competition, product life will be about 4 years, and the productâ€™s market share will decrease by 25% each year over the previous yearâ€™s share. You are approached by a big software house which wants to purchase the right to manufacture and distribute the product. Assuming that your interest rate is 15%, for what minimum price would you be willing to sell the software?
A.	2887776
B.	2766344
C.	2047734
D.	2507621
Answer» D. 2507621