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You are negotiating a book deal for your newest novel. The publisher offers to pay you an advance of $2.0 million today plus $500,000 at
You are negotiating a book deal for your newest novel. The publisher offers to pay you an advance of $2.0 million today plus $500,000 at the end of each of the next three years. You counter the publishers offer with a counteroffer that will pay you $2.5 million today plus $5 per book sold in each of the next three years. How many books do you think you will sell each year in the next three years? Suppose that you will sell the same amount of copies of your book each year. The annual rate of discount is 5 percent.
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