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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 9.3 % 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 $4.9 million 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?
If a firm wishes to retain the same return on equity when its net profit margin and total asset turnover has declined, it must
Prepare a cash budget and provide advices for the second quarter of 201x based upon the information.
Consider now a 5 1/2 bond, maturing 3/31/03, trading at 102:15 for settlement 8/12/02. Calculate accrued interest and invoice price
An all equity firm worth $100 today will be worth either $150 or $80 in one year in the good and bad states respectively. What would be the returns to equity in each state of the world be if the firm re-capitalized by borrowing $60 (and paying this a..
What is the amount of the annuity purchase required if you wish to receive a fixed payment of $290,000 for 25 years? Assume that the annuity will earn 11 percent per year.
A small company heats its building and spends $8,800 per year on natural gas for this purpose. Cost increases of natural gas are expected to be 9% per year starting one year from now (i.e., the first cash flow is $9,592 at EOY one). The total annual ..
Finding the Dividend. Gontier Corporation stock currently sells for $64.13 per share. The market requires an 11 percent return on the firm's stock. If the company maintains a constant 5.5 percent growth rate in dividends, what was the most recent div..
What will the operating cash flow be if output rises to 20,500 units? What will the operating cash flow be if output falls to 17,000 units?
The Evanec Company's next expected dividend, D1, is $3.18; its growth rate is 6%; and its common stock now sells for $36. New stock (external equity) can be sold to net $32.40 a share. Using the DCF approach, what is the cost of common equity? If you..
If the interest rate is 5.5% annually, how much money can she afford to borrow?
Consider a wind energy project that produces 399 GWh/yr and is able to sell this at a cost of $0.1/kWh. The project will also receive income in this year from the PTC, at a value of $0.023/kWh. The annual operating expenses come out to be $0.014/kWh ..
What is the difference between the following: Treasury Bill, Treasury Note and Treasury Bond? Pick a real example of each on any day.
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