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A book project which you are considering will require a substantial commitment of your time over the next six months, which you estimate is worth

A book project which you are considering will require a substantial commitment of your time over the next six months, which you estimate is worth $10,000 in today’s dollars. One year from today you expect to receive a $5,000 royalty from book sales, and in subsequent years you expect the royalty to decline by 25% each year. Your opportunity cost of capital is 8%. Calculate both the NPV and IRR and what these methods recommend.

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