a | Initial payment to write the book = $ 15 Million |
Therefore, Present Value of Cash Inflows = $ 15 Million | |
Computation of PV of Cash Outflows: | |
PV of Cash outflows here is Present Value of Earnings forgone for Writing Speeches. | |
PV of Cash outflows = $8.2 Million * PVAF(9.4%, 3 Years) | |
PV of Cash outflows = $8.2 Million * 2.5134 | |
PV of Cash outflows = $ 20.61 Million | |
Computation of NPV (Assumuing No Royalty Payments) | |
NPV = PV of Cash Inflows - PV of Cash Out flows | |
NPV = $ 15 Million - $ 20.61 Million | |
NPV = - $ 5.61 Million | |
b. | Computation of NPV (With Royalty Payments) |
Computation of PV of Cash Inflows: | |
PV of Cash Inflows here is Present Value of Earnings forgone for Writing Speeches and PV of Royalty Payments | |
PV of Royalty Payments = $ 5.1 Million / (0.094 - (-0.30)) | |
PV of Royalty Payments = $ 5.1 Million / (0.094 - (-0.30)) | |
PV of Royalty Payments = $ 5.1 Million / 0.394 | |
PV of Royalty Payments = $ 12.94 Million | |
Therefore, Present Value of Cash Inflows = $ 15 Million + $ 12.94 Million | |
Present Value of Cash Inflows = $ 27.94 Million | |
Computation of NPV (Assumuing No Royalty Payments) | |
NPV = PV of Cash Inflows - PV of Cash Out flows | |
NPV = $ 27.94 Million - $ 20.61 Million | |
NPV = $ 7.33 Million |
Bill Clinton reportedly was paid $15.0 million to write his book My Life. The book took...
Bill Clinton reportedly was paid $15.0 million to write his book My Life. 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 $8.6 million per year (paid at the end of the year) speaking instead of writing. Assume his cost of capital is 10.5% per year. a. What is the NPV of agreeing to write the book (ignoring any royalty...
Bill Clinton reportedly was paid an advance of $10.0 million to write his book My Life. Suppose the book took three years been paid to make speeches. Given his popularity, assume that he could earn $8.3 million a year (paid at the end of the year) speaking instead of writing. Assume his cost of capital is 9.4% per year. a. What is the NPV of agreeing to write the book (ignoring any royalty payments)? b. Assume that, once the book...
Bill Clinton reportedly was paid $15.0 million to write his book My Life. 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 $8.9 million per year (paid at the end of the year) speaking instead of writing. Assume his cost of capital is 10.4%per year. a. What is the NPV of agreeing to write the book (ignoring any royalty payments)?...
Bill Clinton reportedly was paid $15.0 million to write his book My Life. 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 $8.5 million per year (paid at the end of the year) speaking instead of writing. Assume his cost of capital is 9.8% per year. a. What is the NPV of agreeing to write the book (ignoring any royalty...
Bill Clinton reportedly was paid $ 15.0 million to write his book My Life. 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 $ 8.5 million per year (paid at the end of the year) speaking instead of writing. Assume his cost of capital is 10.3 % per year. a. What is the NPV of agreeing to write the book...
Bill Clinton reportedly was paid an advance of $10.0 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 $7.5 million a year (paid at the end of the year) speaking instead of writing. Assume his cost of capital is 10.4% per year. a. What is the NPV of agreeing to write the...
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....
XP 8-10 (similar to) Question Help Bill Clinton reportedly was paid $15.0 million to write his book My Life. 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 $8.6 million per year (paid at the end of the year) speaking instead of writing. Assume his cost of capital is 9.6% per year. a. What is the NPV of agreeing to...
Bill Clinton reportedly was paid $10.0 million to write his book My Life. 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 $8.0 million a year (paid at the end of the year) speaking instead of writing. Assume his cost of capital is 10.0% per year. Assume also that once the book is finished, it is expected to generate royalties...
Bill Clinton reportedly was paid $12 million to write his book My Life. 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 $8.50 million per year (paid at the end of the year) speaking instead of writing. Assume his cost of capital is 10.0% per year.a. Based on the above cash flows, how many IRRs does the opportunity have? Does the IRR rule give the right...