Celt Caledonia Has Several Patents on Textile Machinery

Celt Caledonia has several patents on textile machinery. Because of technological advances in Asia that allow Asians to produce textiles faster and more efficiently, Celt Caledonia believes its patents are impaired. Celt Caledonia has determined that the fair market value of the patents is about €6 million less €500,000 in legal fees. Celt Caledonia has determined that the patent will generate €4 million each year for the next 2 years. At that point, it will have zero salvage value. Celt Caledonia's risk premium is 4 percent. The risk-free rate 3 percent. What is the patents' value in use (round to the nearest tenth of a million?

A) 5.5 million
B) 6 million
C) 7.2 million
D) 7.5 million
E) 7.7 million