Question: please write the steps (no excel) Barack Obama reportedly was paid $15.5 million to write his book A Promised Land. Suppose the book took three

please write the steps (no excel) Barack Obama reportedly was paid

please write the steps (no excel)

Barack Obama reportedly was paid $15.5 million to write his book "A Promised Land". Suppose the book took three years to write. In the time he spent writing, Obama could have been paid to make speeches. Given his popularity, assume that he could earn $7.4 million per year (paid at the end of the year) speaking instead of writing. Assume his cost of capital is 9.1% per year. a. What is the NPV of agreeing to write the book (ignoring any royalty payments)? (Hint: missed opportunity is considered as 'outflow") (#1) b. Assume that, once the book is finished, it is expected to generate royalties of $4.6 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 royalty payments? (#2) Remember to answer in millions. (Example: 1 million = 1000000) -20467000060000 X One possible correct answer is: -3198246.9708061 29457572780000 X One possible correct answer is: 8566458.9115468

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