1. The author of a bestselling novel was offered the following alternatives by movie company for the rights to make her novel into a movie. A.) A single lump sum payment of 500,000 or B.) An initial payment of 250,000 plus 2% of the movies gross receipts for the next 5 years estimated to be as follows: Gross Receipts End of Year 1 2345 2 3 4 5 10,000,000 8,000,000 6,000,000 4,000,000 2,000,000 20% of Gross Receipts 200,000 160,000 120,000 80,000 40,000 If money is worth 14% to the author, which alternative should she seled Disregard income tax consideration. 2. To maintain a bridge, P5,000 will be required at the end of 3 years ar annually thereafter. If money is worth 8%, determine the capitalized cost of future maintenance.

1. The author of a bestselling novel was offered the following alternatives by movie company for the rights to make her novel into a movie. A.) A single lump sum payment of 500,000 or B.) An initial payment of 250,000 plus 2% of the movies gross receipts for the next 5 years estimated to be as follows: Gross Receipts End of Year 1 2345 2 3 4 5 10,000,000 8,000,000 6,000,000 4,000,000 2,000,000 20% of Gross Receipts 200,000 160,000 120,000 80,000 40,000 If money is worth 14% to the author, which alternative should she seled Disregard income tax consideration. 2. To maintain a bridge, P5,000 will be required at the end of 3 years ar annually thereafter. If money is worth 8%, determine the capitalized cost of future maintenance.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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