Professor Wendy Smith has been offered the following opportunity: A law firm would like to retain...
Professor Wendy Smith has been offered the following opportunity: A law firm would like to retain her for an upfront payment of $50,000. In return, for the next year the firm would have access to eight hours of her time every month. As an alternative payment arrangement, the firm would pay Professor Smith's hourly rate for the eight hours each month. Smith's rate is $540 per hour and her opportunity cost of capital is 15% per year. What does the IRR rule advise regarding the payment arrangement? (Hint: Find the monthly rate that will yield an effective annual rate of 15%.) What about the NPV rule?
Homework Answers
Monthly Rate = 8(540) = $4,320
Calculating Present Value of Monthly Payment,
Using TVM Calculation,
PV = [FV = 0, PMT = 4,320, I = 0.15/12, N = 12]
PV = $47,862.63
NPV = -50,000 + 47,862.63
NPV = -$2,137.37
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Professor Wendy Smith has been offered the following opportunity: A law firm would like to retain...
Professor Wendy Smith has been offered the following opportunity: A law firm would like to retain...
Professor Wendy Smith has been offered the following opportunity: A law firm would like to retain her for an upfront payment of $50,000. In return, for the next year the firm would have access to eight hours of her time every month. As an alternative payment arrangement, the firm would pay Professor Smith's hourly rate for the eight hours each month. Smith's rate is $550 per hour and her opportunity cost of capital is 15% per year. What does...
Professor Wendy Smith has been offered the following opportunity: A law firm would like to retain...
Professor Wendy Smith has been offered the following opportunity: A law firm would like to retain her for an upfront payment of $50,000. In return, for the next year the firm would have access to eight hours of her time every month. As an alternative payment arrangement, the firm would pay Professor Smith's hourly rate for the eight hours each month. Smith's rate is $555 per hour and her opportunity cost of capital is 15% per year. What does...
Professor Wendy Smith has been offered the following opportunity: A law firm would like to retain...
Professor Wendy Smith has been offered the following opportunity: A law firm would like to retain her for an upfront payment of $49,000. In return, for the next year the firm would have access to eight hours of her time every month. As an alternative payment arrangement, the firm would pay Professor Smith's hourly rate for the eight hours each month. Smith's rate is $540 per hour and her opportunity cost of capital is 15% per year. What does the...
Professor Wendy Smith has been offered the following opportunity: A law firm would like to retain her for an upfront pa...
Professor Wendy Smith has been offered the following opportunity: A law firm would like to retain her for an upfront payment of $49,000. In return, for the next year the firm would have access to eight hours of her time every month. As an alternative payment arrangement, the firm would pay Professor Smith's hourly rate for the eight hours each month. Smith's rate is $535 per hour and her opportunity cost of capital is 15% per year. What does the...
Professor Wendy Smith has been offered the following opportunity: A law firm would like to retain...
Professor Wendy Smith has been offered the following opportunity: A law firm would like to retain her for an upfront payment of $49,000. In return, for the next year the firm would have access to eight hours of her time every month. As an alternative payment arrangement, the firm would pay Professor Smith's hourly rate for the eight hours each month. Smith's rate is $545 per hour and her opportunity cost of capital is 15% per year. What does...
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4. Professor Wendy Smith has been offered the following opportunity: A law firm would like to retain her for an upfront payment of $49,000. In return, for the next year the firm would have access to eight hours of her time every month. As an alternative payment arrangement, the firm would pay Professor Smith's hourly rate for the eight hours each month. Smith's rate is $540 per hour and her opportunity cost of capital is 15% per year. What does...
Professor Wendy Smith has been offered the following deal: A law firm would like to retain...
Professor Wendy Smith has been offered the following deal: A law firm would like to retain her for an upfront payment of $50,000. In return, for the next year, the firm would have access to eight hours of her time every month. Smith's rate is $550 per hour, and her opportunity cost of capital is 15% (equivalent annual rate, EAR). What is the IRR (annual)? What does the IRR rule advise regarding this opportunity? What is the NPV? What does...
Professor Wendy Smith has been offered the following deal: A law firm would like to retain...
Professor Wendy Smith has been offered the following deal: A law firm would like to retain her for an upfront payment of $ 60,000. In return, for the next year, the firm would have access to eight hours of her time every month. Smith's rate is $ 630 per hour, and her opportunity cost of capital is 14 % (equivalent annual rate, EAR). What is the IRR (annual)? What does the IRR rule advice regarding this opportunity? What is the...
Problem 8-18 Professor Wendy Smith has been offered the following deal: A law firm would like...
Problem 8-18 Professor Wendy Smith has been offered the following deal: A law firm would like to retain her for an up- front payment of $50,000. In return, for the next year the firm would have access to eight hours of her time every month. Smith's rate is $550 per hour and her opportunity cost of capital is 15% per year. What does the IRR rule advise regarding this opportunity? What about the NPV rule? Complete the steps below using...
please do not use Excel I want to see the longhand steps The image is fine....
please do not use Excel I want to see the longhand steps
The image is fine.
Professor Wendy Smith has been offered the following opportunity. A law firm would like to retain her for an upfront payment of $48.000. In retum, for the next year the firm would have access to eight hours of her time every month As an alternative payment arrangement the firm would pay Professor Smith's hourly rate for the eight hours each month Smith's rate is...
Professor Wendy Smith has been offered the following opportunity: A law firm would like to retain her for an upfront payment of $49,000. In return, for the next year the firm would have access to eight hours of her time every month. As an alternative payment arrangement, the firm would pay Professor Smith's hourly rate for the eight hours each month. Smith's rate is $540 per hour and her opportunity cost of capital is 15% per year. What does the...
4. Professor Wendy Smith has been offered the following opportunity: A law firm would like to retain her for an upfront payment of $49,000. In return, for the next year the firm would have access to eight hours of her time every month. As an alternative payment arrangement, the firm would pay Professor Smith's hourly rate for the eight hours each month. Smith's rate is $540 per hour and her opportunity cost of capital is 15% per year. What does...
Professor Wendy Smith has been offered the following deal: A law firm would like to retain her for an upfront payment of $50,000. In return, for the next year, the firm would have access to eight hours of her time every month. Smith's rate is $550 per hour, and her opportunity cost of capital is 15% (equivalent annual rate, EAR). What is the IRR (annual)? What does the IRR rule advise regarding this opportunity? What is the NPV? What does...
Problem 8-18 Professor Wendy Smith has been offered the following deal: A law firm would like to retain her for an up- front payment of $50,000. In return, for the next year the firm would have access to eight hours of her time every month. Smith's rate is $550 per hour and her opportunity cost of capital is 15% per year. What does the IRR rule advise regarding this opportunity? What about the NPV rule? Complete the steps below using...
please do not use Excel I want to see the longhand steps
The image is fine.
Professor Wendy Smith has been offered the following opportunity. A law firm would like to retain her for an upfront payment of $48.000. In retum, for the next year the firm would have access to eight hours of her time every month As an alternative payment arrangement the firm would pay Professor Smith's hourly rate for the eight hours each month Smith's rate is...
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