Jack Smith reportedly was paid $10.1 million to write his book The Fork in the RoadThe Fork in the Road. The book took three years to write. In the time he spent writing, Jack Smith could have been paid to make speeches. Given his popularity, assume that he could earn $8.2 million a year (paid at the end of the year) speaking instead of writing. If his cost of capital is 10% per year, then the NPV of agreeing to write the book (ignoring any royalty payments) is -$10,292,186.
How many IRRs are there in this problem? Does the IRR rule give the right answer in this case? (Note: Consider the upfront payment as a positive cash flow and the opportunity cost of missed speaking fees as negative cash flows.)
The IRR is _____ (Round to two decimal places.)
How many IRRs are there in this problem? (Select the best choice below.)
Does the IRR rule give the right answer in this case?(Select the best choice below.)
Yes, because the IRR (62.14%) is greater than the cost of capital.
Yes, because the NPV is positive.
No, because the IRR is negative.
No, because the NPV is negative ($10,292,186), and therefore the IRR gives the wrong answer.
What are some advantages and disadvantages of a sales incentive program in which the top performers receive a trip or other large reward, while other sales individuals re...May 06 2020
Use the information in Exercise 1-14 to prepare an October statement of owner’s equity for Real Solutions.Exercise 1-14On October 1, Natalie King organized Real Solutio...Jul 20 2020
Purchase-related transactionsJournalize entries for the following related transactions of Platypus Company:1. Purchased $71,500 of merchandise from Sitwell Co. on account...May 14 2020
Cruz Company has purchased two tracts of land. One tract will be the site of its new manufacturing plant, while the other is being purchased with the hope that it will be...Apr 04 2020
Respond to the given questions:Most hospitals use square footage to allocate housekeepingcosts. The rationale, of course, is that a patient servicesdepartment that is twi...Jun 06 2021
Assume memory accesses take 70 ns and the memory accesses are 36% of all instructions. For a given processor P1, the L1 cache size is 2KB, L1 miss rate is 8%and L1 Hit ti...Mar 27 2020
Motorola obtains its smartphones and wall chargers from its contract manufacturer located in China to supply the U.S. market, which is served from a warehouse located in ...Aug 21 2020
The following information is from the 2013 records of Armadillo Camera Shop:Accounts receivable, December 31, 2013$20,000 (debit)Allowance for uncollectible accounts, Dec...Dec 20 2019
What features or rights may alter the character of preferred stock?Jun 18 2020
Factory plans to hire 200people and 800 service workers. Each of these workers will bring 1.5 member . What is employment multiplier..May 07 2021