Camila Jurez owns a successful law firm, her core business is corporate law, but occasionally Camila also

Camila Juárez owns a successful law firm, her core business is corporate law, but occasionally Camila also works with mandates from wealthy clients requesting assistance in private legal matters. You are Camila’s financial advisor, and she asks you to help her decide which of the private mandates she should accept.

You estimate that Camila’s opportunity cost of capital is 15% per effective annual and that she gives up $100,000 in monthly income from corporate work (assume this income is paid at the end of each month) if she accepts a private mandate.

Client C, who has hired Camila before, proposes that she can choose to represent him in the next legal mandate. This client pays well, but only makes a payment just at the end of the mandate. This mandate would last 5 months, and Camila would receive a payment of $550,000.

Calculate the effective monthly internal rate of return (IRR) of the mandate.

 

Transcribed Image Text:

5.67% 4.77% 3.38% 4.31% 3.85% 5.67% 4.77% 3.38% 4.31% 3.85%

Answer rating: 100% (QA)

Given Information Amount received at the end of 5 months for the private mandate 550000 Amount g... View the full answer