Homework Answers
As per the graph, the NPV becomes zero at two points which are the IRRs so this problem has two IRRs.
The IRR rule is in conflict with the NPV decision because the project is acceptable if IRR > discount rate for the NPV. In this case, for the first IRR, it is less than the discount rate so it is in agreement with the NPV decision, to not accept the project. However, for the second IRR, as per the IRR rule, the project is acceptable. So, it is best to go by the NPV decision.
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Bill Clinton reportedly was paid $10 million to write his book My Life. Suppose the book...
Bill Clinton reportedly was paid $10 million to write his book
My Life. Suppose the book took three years to write. In the time he
spent writing, Clinton could have been paid to make speeches. Given
his popularity, assume that he could earn $8 million per year (paid
at the end of the year) speaking instead of writing. Assume his
cost of capital is 10% per year.
Bill Clinton reportedly was paid $10 million to write his book My Life....
Bill Clinton reportedly was paid $15.0 million to write his book My Life. The book took...
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