Professor Wendy Smith has been offered the following deal: A law firm would like to retain her

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Professor Wendy Smith has been offered the following deal: A law firm would like to retain her for an upfront payment of $52,000. In return, for the next year the firm would have access to 8 hours of her time every month. Smith’s rate is $556 per hour and her opportunity cost of capital is 14% (EAR). What does the IRR rule advise regarding this opportunity? What about the NPV rule?

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Corporate Finance The Core

ISBN: 9781292158334

4th Global Edition

Authors: Jonathan Berk, Peter DeMarzo

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