Professor Wendy Smith has been offered the following deal: A law firm would like to retain her for an up-front payment of $50,000. In return, for the next year the firm would have access to eight hours of her time every month. Smiths 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?

Up-front payment Hourly rate Hours per month Opportunity cost Months in a year Monthly rate of pay IRR (monthly) IRR (annual) Take opportunity (Yes/No) Monthly opportunity cost NPV Take opportunity (Yes/No)