Professor Brad has been offered the following opportunity: A law firm would like to retain his for an upfront payment of $50000. In return, for the next year the firm would have access to eight hours of his time every month. As an alternative payment arrangement, the firm would pay Professor Brad's hourly rate for the eight hours each month. Brad's rate is $535 per hour and her opportunity cost of capital is 13 % per year. What does the IRR rule advise regarding the payment arrangement? (Hint: Find the monthly rate that will yield an effective annual rate of 13 %.) What about the NPV rule? A. What is the IRR?
Professor Brad has been offered the following opportunity: A law firm would like to retain his for an upfront payment of $50000. In return, for the next year the firm would have access to eight hours of his time every month. As an alternative payment arrangement, the firm would pay Professor Brad's hourly rate for the eight hours each month. Brad's rate is $535 per hour and her opportunity cost of capital is 13 % per year. What does the IRR rule advise regarding the payment arrangement? (Hint: Find the monthly rate that will yield an effective annual rate of 13 %.) What about the NPV rule? A. What is the IRR?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Professor Brad has been offered the following opportunity: A law firm would like to retain his for an upfront payment of $50000. In return, for the next year the firm would have access to eight hours of his time every month. As an alternative payment arrangement, the firm would pay Professor Brad's hourly rate for the eight hours each month. Brad's rate is $535 per hour and her
(Hint: Find the monthly rate that will yield an effective annual rate of 13 %.)
What about the NPV rule?
A. What is the IRR?
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