13. During 2020 internationally renowned singer Molly Vanilli is somewhat fed up with singing. A publisher closely relat

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13. During 2020 internationally renowned singer Molly Vanilli is
somewhat fed up with singing. A
publisher closely related to the music industry offers her to write
her memoires from next year
onwards and offers her an upfront payment of $1,000,000 now. If she
is able to come up with a draft
of the first 100 pages in two years time she will receive another
payment of $750,000. The book needs
to be ready in 4 years. If she succeeds to deliver a publishable
manuscript at the end of year 4 she will
receive another $2,000,000. In the meantime she cannot give
concerts all around the globe which
implies an opportunity cost equal to $750,000 per year until and
including year 4. Assume a discount
rate of 10%. The Net Present Value of this offer comes closest
to...
A) $608,000
B) $609,000
C) $610,000
D) $611,000
Ans: A