Millennium Laboratories Can License One of Its Patented Pharmaceutical Products

question 11

Multiple Choice

Millennium Laboratories can license one of its patented pharmaceutical products to a Japanese company for a five-year period. Millennium would like to insure that the fee it charges to the Japanese company will return no less than what the company projects it could have made had it marketed the product itself. Millennium believes it could have achieved a minimum of $400,000 in the first year, $10,500,000 in the second year, and $50 million, $65 million and $65 million at the end of each year. Given that interest rates are at 9%, what fee paid at the beginning of each year, should Millennium charge?

• A) $110,700,000
• B) $124,100,000
• C) $63,600,000
• D) $32,100,000
• E) $20,900,000

Determine the cost allocation for assets purchased as a lump sum.

Identify and calculate the gain or loss on the disposal of plant assets.

Understand how to compute total asset turnover.

Comprehend the procedure for handling improvements on leased office spaces.

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Definitions:

Output

The total amount of goods and services produced by an individual, company, or country.

Marginal Cost

The cost of producing one additional unit of a good or service.

Total Output

The aggregate quantity of goods or services produced in an economy or by a company during a specific period.