A famous author is about to meet his editor. The deal that he is considering to accept to write a new finance
A famous author is about to meet his editor. The deal that he is considering to accept to write a new finance text is the following.
• 1. The author will receive an up front payment of $1,000,000
• 2. During the next 3 year, he will be busy writing the book. It will cost him $500,000 a year in term of consulting foregone (no consulting is allowed while writing).
• The current interest rate is 10%.
• His financial calculator tells him that the IRR on this deal is 23%
• Should he sign the contract?
Suppose now the editor announce that the author will receive $20,000 a year in perpetuity once the book is published.
• Is this a better deal?
Buy plagiarism free, original and professional custom paper online now at a cheaper price. Submit your order proudly with us
