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. Smith’s 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? PLZ I NEED THE FORMULAS AS THIS IS ON EXCEL.THANKS GREATLY |
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Up-front payment | $50,000 | |||||
Hourly rate | $550 | |||||
Hours per month | 8 | |||||
Opportunity cost | 15% | |||||
Months in a year | 12 | |||||
Monthly rate of pay | ||||||
IRR (monthly) | ||||||
IRR (annual) | ||||||
Take opportunity (Yes/No) | ||||||
Monthly opportunity cost | ||||||
NPV | ||||||
Take opportunity (Yes/No) | ||||||
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