Question: how to solve using a financial calculator BA Cinton reportedly was paid $150 milion to write his book My Lie. The book took three years

how to solve using a financial calculator
how to solve using a financial calculator BA Cinton reportedly was paid

BA Cinton reportedly was paid $150 milion to write his book My Lie. The book took three years to write. In the time he spent writing. Cirton could have been paid to make speoches. Given his populariyy, assume that he could eam 58.4 mition per yoar (paid at the end of the yoar) speaking instead of writing. Assume his cost of capital is 10.1% por year. a. What is the NPV of agreeing to write the book (ignoning any toyaty payments)? b. Assume that, once the book is finished, it is expected to generate royalties of $5.4 million in the first year (paid at the end of the year) and these royalties are expected to dectease at a rato of 30% per year in perpetuity. What is the NPV of the book with the royalty payments? a. What is the NPV of agreeing to write the book (ignoring any royalty payments)? The NPV of agreeing to write the book (ignering any royaly payments) is 1 (Round to the nearest dollar.) b. Assume that, once the book is finished, it is expected to generate royalies of $5.4 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 royaliy payments? The NPV of the book with the royalty payments is (Round to the nearest dollat.)

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!