Question
Professor Brad has been offered the following opportunity: A law firm would like to retain his for an upfront payment of $50000. In return, for
Professor Brad has been offered the following opportunity: A law firm would like to retain his for an upfront payment of $50000. In return, for the next year the firm would have access to eight hours of his time every month. As an alternative payment arrangement, the firm would pay Professor Brad's hourly rate for the eight hours each month. Brad's rate is $535 per hour and her opportunity cost of capital is 13 % 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 13 %.)
What about the NPV rule?
A. What is the IRR?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started