reportedly was paid
$10.3
million to write his book
The Fork in the Road.
The book took three years to write. In the time he spent​ writing,
Jack Smith
could have been paid to make speeches. Given his​ popularity, assume that he could earn
$8.3
million a year​ (paid at the end of the​ year) speaking instead of writing. If his cost of capital is
10%
per​ year, then the NPV of agreeing to write the book​ (ignoring any royalty​ payments) is
−$10,340,872.
How many IRRs are there in this​ problem? Does the IRR rule give the right answer in this​ case? (Note: Consider the upfront payment as a positive cash flow and the opportunity cost of missed speaking fees as negative cash​ flows.)
The IRR is