Use the Following Information to Answer the Question(s)below

question 71

Multiple Choice

Use the following information to answer the question(s) below.
Sarah Palin reportedly was paid a $11 million advance to write her book Going Rogue.The book took one year to write.In the time she spent writing,Palin could have been paid to give speeches and appear on TV news as a political commentator.Given her popularity,assume that she could have earned $8 million over the year (paid at the end of the year) she spent writing the book.
-Assume that once her book is finished,it is expected to generate royalties of $5 million in the first year (paid at the end of the year) and these royalties are expected to decrease by 40% per year in perpetuity.Assuming that Palin's cost of capital is 10% and given these royalties payments,the NPV of Palin's book deal is closest to:

• A)$3.75 million.
• B)$12.20 million.
• C)$13.00 million.
• D)$13.75 million.

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Definitions:

Public Services

Services provided by the government to people living within its jurisdiction, either directly or by financing private provision of services.

Stakeholder Model

A framework in business that emphasizes considering the interests of all stakeholders, including employees, customers, and the community, not just shareholders.

Deetz

Refers to the work of Stanley Deetz, who advocates for critical scholarship in organizational communication, emphasizing the role of communication in the exercise of power and control within organizations.

Corporate System

A structure or framework that defines the practices, policies, and organizational arrangements of a corporation.