Please give the completely work on Sunday, Feb 13th, before 12Pm with Chicago timezone.
Q.1 Invoice Clinton reportedly was paid $15 million to write down his e-book My Method. The e-book took three years to write down. In the time he spent writing, Clinton may have been paid to make speeches. Given his recognition, assume that he may earn $eight million per 12 months (paid at the finish of the 12 months) talking as a substitute of writing. Assume his value of capital is 10% per 12 months.
a. What’s the NPV of agreeing to write down the e-book (ignoring any royalty funds)?
b. Assume that, as soon as the e-book is completed, it’s anticipated to generate royalties of $5 million in the first 12 months (paid at the finish of the 12 months) and these royalties are anticipated to lower at a price of 30% per 12 months in perpetuity. What’s the NPV of the e-book with the royalty funds?
Q2 What’s the IRR partially (a) of Drawback 1? Does the IRR rule give the proper reply on this case?
Timeline:
zero
1
2
three
15
–eight
–eight
–eight
Q3. You might be contemplating making a film. The film is anticipated to value $10 million upfront and take a 12 months to make. After that, it’s anticipated to make $5 million when it’s launched in a single 12 months and $2 million per 12 months for the following 4 years. What’s the payback interval of this funding? Should you require a payback interval of two years, will you make the film? Does the film have a constructive NPV if the value of capital is 10%?
Timeline:
zero 1 2 three four 5 6
–10 zero 5 2 2 2 2
