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3 years ago

IntelAir Present Value

Business

1 answer:

jonny [76]3 years ago

6 0

The maximum amount that Purifier should pay for IntelAir is $10,538,700.

<h3>Data and Calculations:</h3>

Selling price per antenna = $1,000

All-inclusive production cost per unit = $700

Annual net cash inflow per unit = $300/unit ($1,000 - $700)

Number of units to be sold per year = 5,000 units

Total annual net cash inflow = $1,500,000 ($300 x 5,000)

Expected period of revenue generation = 10 years

Discount rate = 10%

The PV annuity factor at 10% for 10 years = 6.145

The Present value of annuity of net cash inflow = $9,217,500 ($1,500,000 x 6.145).

The Present value of patent sale = $1,818,000 ($2,000,000 x 0.909).

The Present value of upgrading expenses = $496,800 ($800,000 x 0.621).

The maximum amount that Purifier should pay for IntelAir is $10,538,700 ($9,217,500 + $1,818,000 - $496,800).

Thus, the maximum amount that Purifier should pay for IntelAir is $10,538,700.

Learn more about calculating the present values of an investment here: brainly.com/question/20316763 and brainly.com/question/20813161

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