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Two publishers have approached you with contracts. They are mutually exclusive contracts that pay you upfront. You will have labor costs each year after. $35,000.00
Two publishers have approached you with contracts. They are mutually exclusive contracts that pay you upfront. You will have labor costs each year after. $35,000.00 is the pay in the first year of contract A, while contract B pays $80,000.00 upfront. For contract A, the labor costs in years 1 and 2 are -$20000.00 and -$40,000.00, while they are -$35,000.00 and -$75,000.00 for contract B. At what range of discount rates would you accept contract A? How about contract B? When would you reject both?
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