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Bill Clinton reportedly was paid $ 15.0 million to write his book My Life. The book...

Bill Clinton reportedly was paid $ 15.0 million to write his book My Life. The book took three years to write. In the time he spent​ writing, Clinton could have been paid to make speeches. Given his​ popularity, assume that he could earn $ 8.5 million per year​ (paid at the end of the​ year) speaking instead of writing. Assume his cost of capital is 9.3 % per year. a. What is the NPV of agreeing to write the book​ (ignoring any royalty​ payments)? b. Assume​ that, once the book is​ finished, it is expected to generate royalties of $ 4.8 million in the first year​ (paid at the end of the​ year) and these royalties are expected to decrease at rate of 30 % per year in perpetuity. What is the NPV of the book with the royalty​ payments?

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jeff jeffy answered 1 week ago
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