Jenny is a famous writer and she is invited to write a book this year. It...
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Jenny is a famous writer and she is invited to write a book this year. It will take her one year (full-time) to finish the writing. If she agrees to write the book, the expected compensation includes £17 million advance payment at the beginning of the year (time 0) and royalties of £6 million per year in perpetuity from the next year. If she does not write the book, the expected income from alternative activities over the year (time 1) is £8 million. Assuming that Jenny's cost of capital is 20% and given these royalties payments, the NPV of her book deal is closest to O a. £35.33 million. b. £39.00 million. Oc. £40.33 million. Od. £47.00 million. Jenny is a famous writer and she is invited to write a book this year. It will take her one year (full-time) to finish the writing. If she agrees to write the book, the expected compensation includes £17 million advance payment at the beginning of the year (time 0) and royalties of £6 million per year in perpetuity from the next year. If she does not write the book, the expected income from alternative activities over the year (time 1) is £8 million. Assuming that Jenny's cost of capital is 20% and given these royalties payments, the NPV of her book deal is closest to O a. £35.33 million. b. £39.00 million. Oc. £40.33 million. Od. £47.00 million.
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Related Book For
Financial Accounting A User Perspective
ISBN: 978-0470676608
6th Canadian Edition
Authors: Robert E Hoskin, Maureen R Fizzell, Donald C Cherry
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