Which project should DJ Khaled select

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Question - You are DJ Khaled's agent. He has the opportunity to make another one with both Rick Ross and Drake. However, he can only work with one because now Drake and Rick Ross hate each other since they both want to be the Boss. If he works with Rick Ross, DJ Khaled will need to invest $1 million today on a lyricist, studio time, etc. You then believe DJ Khaled would make $500,000 per year for the next 4 years (starting a year from today) at which point Rick Ross would stop working with DJ Klahed and write a new hit song "DillyDallin'." If DJ Khaled works with Drake, he would need to invest $2.2 million today. He would then make $650,000 per year for the next 6 years (starting a year from today). At the end of the 6 years, Drake would have the rest of the rights to the song For Free. If DJ Khaled has a discount rate of 6%, which project should DJ Khaled select?

Reference no: EM132999771

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