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23 Nov 2005, 16:05
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The inventor of a new toy offers the Kiddy Toy Company exclusive rights to manufacture and sell the toy for a lump sum payment of $25,000. After estimating the future sales possibilities beyond one year are nonexistent, the Company management is reviewing an alternative proposal to give a lump sum payment of $2000 plus royalty of $0.50 for each unit sold. How many units must be sold the first year to make this alternative as economically attractive to the investor as the original request?
A) 25,000
B) 50,000
C) 36,000
D) 46,000
E) 20,000
A) 25,000
B) 50,000
C) 36,000
D) 46,000
E) 20,000
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