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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
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 hav e been paid to make speeches. Given his popularity, assume that he could earn $8.9 million per year (paid at the end of the year) speaking instead of writing. Assume his cost of capital is 10.3% 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, t is expec cted to generate royalties of $5.2 million in the first year (paid at the end of the year) and these royalties are expected to decrease at a rate of 30% per year in perpetuity. What is the NPV of the book with the royalty payments
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