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A software company that installs systems for inventory control using RFID technology spent $600,000 per year for the past 3 years in developing their latest product. The company optimistically hopes to recover its investments in 5 years on a single contract beginning immediately (year 0). The company is negotiating a contract that will pay $250,000 now and a to-be-agreed-upon annual increase of a constant amount each year through year 5. How much must the income increase (an arithmetic gradient) each year, if the company wants to realize a return of 15% per year?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92801201

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