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do all 3 for an automatic thumbs up Save Professor Wendy Smith has been offered the following opportunity: A law firm would like to retain

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Save Professor Wendy Smith has been offered the following opportunity: 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. As an alternative payment arrangement, the firm would pay Professor Smith's hourly rate for the eight hours each month. Smith's rate is $540 per hour and her opportunity cost of capital is 15% 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 15%.) What about the NPV rule? The annual IRR is % (Round to two decimal places.) You have just been offered a contract worth $1.07 million per year for 6 years. However, to take the contract, you will need to purchase some new equipment. Your discount rate for this project is 11.6%. You are stil negotiating the purchase price of the equipment. What is the most you can pay for the equipment and still have a positive NPV? A The most you can pay for the equipment and achieve the 11,6% annual return is million (Round to two decimal places) Save 57% Fabulous Fabricators needs to decide how to allocate space in its production facility this year. It is considering the following contracts Contract NPV Use of Facility A $1.95 million 100% B $0.96 million $1.47 million 43% a. What are the profitability indexes of the projects ? b. What should Fabulous Fabricators do? a. What are the profitability indexes of the projects? The profitability index for contract Ais (Round to two decimal places.) Save Professor Wendy Smith has been offered the following opportunity: 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. As an alternative payment arrangement, the firm would pay Professor Smith's hourly rate for the eight hours each month. Smith's rate is $540 per hour and her opportunity cost of capital is 15% 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 15%.) What about the NPV rule? The annual IRR is % (Round to two decimal places.) You have just been offered a contract worth $1.07 million per year for 6 years. However, to take the contract, you will need to purchase some new equipment. Your discount rate for this project is 11.6%. You are stil negotiating the purchase price of the equipment. What is the most you can pay for the equipment and still have a positive NPV? A The most you can pay for the equipment and achieve the 11,6% annual return is million (Round to two decimal places) Save 57% Fabulous Fabricators needs to decide how to allocate space in its production facility this year. It is considering the following contracts Contract NPV Use of Facility A $1.95 million 100% B $0.96 million $1.47 million 43% a. What are the profitability indexes of the projects ? b. What should Fabulous Fabricators do? a. What are the profitability indexes of the projects? The profitability index for contract Ais (Round to two decimal places.)

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