Option has a better financial net present value

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If a teacher decides to sell hs own textbook. It will retail at $275 for a new book, and he will receive a 45% royalty for each book sold. However, he will have to pay the publisher an upfront one-time book processing charge of $37,000. If the teacher looks into the e-book option, students will pay a subscription of $15/month to access the book online for 4 months, and the teacher will receive 76.2% of the subscription fee. However, he will pay a much smaller book processing charge of $10,000. If the class is taught three times a year, all 175 students in the class buy (get access to) the book, and the teacher plans to use the book for 8 years, which option has a better financial net present value for the teacher. Use a discount rate of 12% compounded annually.

Reference no: EM13766250

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