Jacob is thinking to sign contract to consult a venture capital firm as an outside adviser for
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Question:
D1. Suppose the rate of inflation is 4% per year, and Jacob's discount rate, in real terms, is 5%. What is the NPV of this offer?
D2. The venture capital firm also offers Jacob an alternative contract startingat $240,000 in real terms, but indexed with inflation (i.e., growing at the inflation rate).Which contract should Jacob choose?
Related Book For
Entrepreneurial Finance
ISBN: 978-0538478151
4th edition
Authors: J . chris leach, Ronald w. melicher
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