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 $550 per hour and her opportunity cost of capital is 15% per year. What does the annual 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 0%. (Round to two decimal places.) The IRR rule advises: (Select the best choice below.) O A. With an IRR of 15% and with Smith's cost of capital at 10.67%, according to the IRR rule, she should reject this opportunity. O B. Since the IRR is less than the cost of capital, 15%, Smith should accept this opportunity. O C. Since the IRR is less than the cost of capital, 15%, Smith should turn down this opportunity. D. None of the above. The NPV is $ - (Round to the nearest dollar.) The NPV rule advises: (Select the best choice below.) A. Even though the NPV is positive, the IRR is high enough to accept the upfront retainer. O B. Since the NPV is negative, the correct decision is to accept the upfront retainer. C. Even though the NPV is negative, the IRR is below the cost of capital, so the correct decision is to reject the upfront payment. D. None of the above. You run a construction firm. You have just won a contract to build a government office complex. Building it will require an investment of $10.1 million today and $5.3 million in one year. The government will pay you $21.2 million in one year upon the building's completion. Suppose the interest rate is 10.8%. a. What is the NPV of this opportunity? b. How can your firm turn this NPV into cash today? a. What is the NPV of this opportunity? The NPV of the proposal is $0 million. (Round to two decimal places.) b. How can your firm turn this NPV into cash today? (Select the best choice below.) A. The firm can borrow $15.4 million today and pay it back with 10.8% interest using the $19.13 million it will receive from the government. B. The firm can borrow $19.13 million today and pay it back with 10.8% interest using the $21.2 million it will receive from the government. C. The firm can borrow $23.91 million today and pay it back with 10.8% interest using the $21.2 million it will receive from the government. OD. The firm can borrow $15.4 million today and pay it back with 10.8% interest using the $21.2 million it will receive from the government