Question: Sally Famous believes that her image on a line of cosmetics will increase the annual cash flows to your firm by $2,000,000 per year for

Sally Famous believes that her image on a line of cosmetics will increase the annual cash flows to your firm by $2,000,000 per year for five years. For the use of her image, she wants $7,200,000 today. Assume that you believe the cash flow will be closer to $1,800,000 per year at the end of each year for six years. Additionally, you believe the risk of this cosmetics line requires an 8% return.

Do you believe that your firm and Ms. Famous have a wealth sharing opportunity?

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