Bill Clinton reportedly was paid $15.0 million to write his book MyLife. The book took three...

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Bill Clinton reportedly was paid $15.0 million to write his bookMyLife. The book took three years to write. In the time he spent?writing, Clinton could have been paid to make speeches. Given his?popularity, assume that he could earn $8.8 million per year? (paidat the end of the? year) speaking instead of writing. Assume hiscost of capital is 10.3% per year.
a. What is the NPV of agreeing to write the book? (ignoring anyroyalty? payments)?
b. Assume? that, once the book is? finished, it is expected togenerate royalties of $5.2 million in the first year? (paid at theend of the? year) and these royalties are expected to decrease at arate of 30% per year in perpetuity. What is the NPV of the bookwith the royalty payments?

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Bill Clinton reportedly was paid $15.0 million to write his bookMyLife. The book took three years to write. In the time he spent?writing, Clinton could have been paid to make speeches. Given his?popularity, assume that he could earn $8.8 million per year? (paidat the end of the? year) speaking instead of writing. Assume hiscost of capital is 10.3% per year.a. What is the NPV of agreeing to write the book? (ignoring anyroyalty? payments)?b. Assume? that, once the book is? finished, it is expected togenerate royalties of $5.2 million in the first year? (paid at theend of the? year) and these royalties are expected to decrease at arate of 30% per year in perpetuity. What is the NPV of the bookwith the royalty payments?