Mary is in contract negotiations with a publishing house for her new novel.She has two options.She may be paid $100,000 up front,and receive royalties that are expected to total $26,000 at the end of each of the next five years.Alternatively,she can receive $200,000 up front and no royalties.Which of the following investment rules would indicate that she should take the former deal,given a discount rate of 8%?
A)Rule I only
B)Rule III only
C)Rules II and III
D)Rules I and II
E)Rules I and III

Question

Mary is in contract negotiations with a publishing house for her new novel.She has two options.She may be paid $100,000 up front,and receive royalties that are expected to total $26,000 at the end of each of the next five years.Alternatively,she can receive $200,000 up front and no royalties.Which of the following investment rules would indicate that she should take the former deal,given a discount rate of 8%? 
A)Rule I only 
B)Rule III only 
C)Rules II and III 
D)Rules I and II 
E)Rules I and III

Quizplus · Accepted Answer

The Answer of Mary is in contract negotiations with a publishing house for her new novel.She has two options.She may be paid $100,000 up front,and receive royalties that are expected to total $26,000 at the end of each of the next five years.Alternatively,she can receive $200,000 up front and no royalties.Which of the following investment rules would indicate that she should take the former deal,given a discount rate of 8%? 
A)Rule I only 
B)Rule III only 
C)Rules II and III 
D)Rules I and II 
E)Rules I and III

Mary Is in Contract Negotiations with a Publishing House for Her