Professor Wendy Smith has been offered the following deal: A law firm would like to retain her

Question:

Professor Wendy Smith has been offered the following deal: A law firm would like to retain her for an upfront payment of $50,000. In return, for the next year the firm would have access to eight hours of her time every month. Smith’s rate is $550 per hour and her opportunity cost of capital is 15% per year. What does the IRR rule advise regarding this opportunity? What about the NPV rule?

Cost Of Capital
Cost of capital refers to the opportunity cost of making a specific investment . Cost of capital (COC) is the rate of return that a firm must earn on its project investments to maintain its market value and attract funds. COC is the required rate of...