What is the npv of agreeing to write the book

Assignment Help Finance Basics
Reference no: EM132494574

John Howard reportedly was paid $ 420 000 to write his book Lazarus Rising. The book took three years to write. In the time he spent? writing, Howard could have been paid to make speeches. Given his significance as? Australia's second-longest serving Prime? Minister, assume that he could earn $ 310 000 per year? (paid at the end of the? year) speaking instead of writing. Assume his cost of capital is 10.1 % per year.

a. What is the NPV of agreeing to write the book? (ignoring any royalty? payments)?

b. Assume? that, once the book is? finished, it is expected to generate royalties of $ 210 000 in the first year? (paid at the end of the? year) and these royalties are expected to decrease at a rate of 30 % per year in perpetuity. What is the NPV of the book with the royalty? payments?

Reference no: EM132494574

Questions Cloud

Is personal liability of the owners for any business debts : Personal liability of the owners for any business debts is an important consideration when selecting an appropriate form of business organization.
Determine the forward rate applicable to the six-month : Determine the forward rate applicable to the six-month period starting six months from now, expressed as a nominal annual rate convertible semiannually
How a caregiver serve children that have been traumatized : How a caregiver can best serve children that have been traumatized? Please present your thoughts and feelings in dealing with children who have suffered.
Interest rates in the economy as a consequence : What is likely to happen to interest rates in the economy as a consequence? Use the loanable funds theory of interest rate to explain your answer.
What is the npv of agreeing to write the book : Assume? that, once the book is? finished, it is expected to generate royalties of $ 210 000 in the first year? (paid at the end of the? year)
What are the impacts of those transactions on the business : What sort of transactions would you encounter in that field? What are the impacts of those transactions on the business? List and describe some examples.
CYB5CYA Algorithms Assignment : CYB5CYA Algorithms Assignment help and solution, La Trobe University - assessment writing service - State the purpose and objectives of the report
Draw up separate depreciation schedules for the machinery : Draw up separate depreciation schedules for the machinery using the straight-line method, and the declining-balance method using double the straight-line
What are the pros and cons of the expanding popularity : Consider the functions of money as well as the risks inherent in traditional fiat currency. After watching the video, consider the following questions.

Reviews

Write a Review

Finance Basics Questions & Answers

  Utilize financial information during decision making

Give example where you could utilize your learning of comparative balance sheets, trend analysis, sensitivity analysis, etc. at your workplace.

  What is the estimated cost of common equity

What is the estimated cost of common equity to the firm using the dividend growth model? Hetterbrand's CFO has asked his financial analyst to estimate.

  What is choi cost of new common stock

The Choi's Company's next expected dividend, D1, is $3.18; its growth rate is 6 percent; and its stock currently sells for $36. New stock can be sold to net the firm $32.40 per share. (a) What is Choi's percentage flotation cost? (b) What is Choi'..

  Business and start over with a new idea

If cost surpass the revenue, what do you think you could do to try and get it back in line to be profitable? Or do you just forget the business and start over.

  Discuss the simultaneous policies on the dollar

After the financial turmoil in the US in 2009, the federal Reserve in the US was buying bonds in order to keep interest rates low.

  Maximum allowable payback

Compute the payback period statistic for the following project and recommend whether the firm should accept or reject the project with the cash flow shown in the chart if the maximum allowable payback is 4 years

  Explain the mechanism for loan securitization

Pass-through securities are the primary mechanism for loan securitization. Summarize the creation of a Ginnie Mae (GNMA) pass-through security and explain).

  Project equivalent annual cost-eac

A five-year project has an initial fixed asset investment of $355,000, an initial NWC investment of $39,000, and an annual OCF of -$38,000. The fixed asset is fully depreciated over the life of the project and has no salvage value. If the required..

  Compute the weighted cost of capital use in evaluating

Compute the weighted cost of capital that is appropriate to use in evaluating this expansion program

  An american business pays 10000 15000 and 20000 to

an american business pays 10000 15000 and 20000 to suppliers in japan switzerland and cananda respectively. how much in

  Any analysis incorporating discounted cash flow

Any analysis incorporating Discounted Cash Flow

  Initial net working capital

The working capital will be fully recovered at the end of the project life. Should this project be implemented if Picus Group requires an 9.0% rate of return?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd