financeMason, Inc., is considering the purchase of a patent that has a cost of $85,000 and an estimated revenue producing life of 4 years. Mason has a required rate of return that is 12% and a cost of capital of 11%. The patent is expected to generate the following amounts of annual income and cash flows:
$$
\begin{array}{lcccc}
& \text { Year 1 } & \text { Year 2 } & \text { Year 3 } & \text { Total } \\
\text { Net income } & \$ 6,900 & \$ 9,600 & \$ 3,000 & \$ 6,300 \\
\text { Operating cash flows } & 19,500 & 18,700 & 20,250 & 15,900
\end{array}
$$
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