CLP CLP Licensing Valuation & Financial Analysis

Question 1

Which valuation method estimates the value of a license by comparing it to similar transactions in the marketplace?

Accepted Answer

Market comparable approach

Answer

Income approach

Answer

Cost approach

Answer

Relief-from-royalty method

Question 2

The '25% rule of thumb' in licensing suggests the licensee should pay the licensor approximately what share of gross profits as a royalty?

Accepted Answer

25%

Answer

10%

Answer

50%

Answer

75%

Question 3

What does NPV stand for in the context of licensing deal financial analysis?

Accepted Answer

Net Present Value

Answer

Net Profit Value

Answer

Nominal Price Valuation

Answer

New Product Value

Question 4

A running royalty in a license agreement is best described as:

Accepted Answer

A percentage of sales paid periodically over the license term

Answer

A one-time upfront payment at signing

Answer

A fixed annual fee regardless of sales

Answer

A payment triggered only upon patent grant

Question 5

Which financial metric measures the minimum sales volume a licensee must achieve before royalty payments cover a fixed upfront license fee?

Accepted Answer

Break-even point

Answer

Internal rate of return

Answer

Payback period

Answer

Gross margin

Question 6

In the income approach to IP valuation, what primary element is discounted to determine value?

Accepted Answer

Future incremental cash flows attributable to the IP

Answer

Historical R&D expenditures

Answer

Current book value of assets

Answer

Comparable market sale prices