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John Grisham, author of the best-selling novel "The Chamber" sold its copyright to Warner Bros. for the rights to make it into a motion picture. Mr. Grisham's has options between the following Warner Bros. proposals: A. An immediate lump sum payment of $5,000,000. B. An initial payment of S2,500,000 plus 4% of the movie's gross receipts for the next 5 years which is forecasted as follows: End of year Gross receipt 4% of Gross Receipt 1 $10,000,000.00 S400,000.00 2 $8,000,000.00 S320,000.00 3 S6,000,000.00 S240,000.00 4 $4,000,000.00 S160,000.00 5 S2,000,000.00 S80,000.00 If money is worth 10% and Mr. Grisham will not receive any royalty after the fifth year of exhibition of the movie, by how much is proposal A bigger than proposal B? Select the correct response: P1,289,450 P1,478,100 P1,532,630 P1,390,090

John Grisham, author of the best-selling novel "The Chamber" sold its copyright to Warner Bros. for the rights to make it into a motion picture. Mr. Grisham's has options between the following Warner Bros. proposals: A. An immediate lump sum payment of $5,000,000. B. An initial payment of S2,500,000 plus 4% of the movie's gross receipts for the next 5 years which is forecasted as follows: End of year Gross receipt 4% of Gross Receipt 1 $10,000,000.00 S400,000.00 2 $8,000,000.00 S320,000.00 3 S6,000,000.00 S240,000.00 4 $4,000,000.00 S160,000.00 5 S2,000,000.00 S80,000.00 If money is worth 10% and Mr. Grisham will not receive any royalty after the fifth year of exhibition of the movie, by how much is proposal A bigger than proposal B? Select the correct response: P1,289,450 P1,478,100 P1,532,630 P1,390,090

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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John Grisham, author of the best-selling novel "The Chamber" sold its copyright to Warner Bros. for the rights to make it into a motion picture. Mr. Grisham's has options between the following Warner Bros. proposals: A. An immediate lump sum payment of $5,000,000. B. An initial payment of S2,500,000 plus 4% of the movie's gross receipts for the next 5 years which is forecasted as follows: End of year Gross receipt 4% of Gross Receipt 1 $10,000,000.00 S400,000.00 2 $8,000,000.00 S320,000.00 3 $6,000,000.00 S240,000.00 4 $4,000,000.00 $160,000.00 5 $2,000,000.00 S80,000.00 If money is worth 10% and Mr. Grisham will not receive any royalty after the fifth year of exhibition of the movie, by how much is proposal A bigger than proposal B? Select the correct response: P1,289,450 P1,478,100 P1,532,630 P1,390,090
Transcribed Image Text:John Grisham, author of the best-selling novel "The Chamber" sold its copyright to Warner Bros. for the rights to make it into a motion picture. Mr. Grisham's has options between the following Warner Bros. proposals: A. An immediate lump sum payment of $5,000,000. B. An initial payment of S2,500,000 plus 4% of the movie's gross receipts for the next 5 years which is forecasted as follows: End of year Gross receipt 4% of Gross Receipt 1 $10,000,000.00 S400,000.00 2 $8,000,000.00 S320,000.00 3 $6,000,000.00 S240,000.00 4 $4,000,000.00 $160,000.00 5 $2,000,000.00 S80,000.00 If money is worth 10% and Mr. Grisham will not receive any royalty after the fifth year of exhibition of the movie, by how much is proposal A bigger than proposal B? Select the correct response: P1,289,450 P1,478,100 P1,532,630 P1,390,090
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