Professor Wendy Smith has been offered the following? opportunity: A law firm would like to retain her for an upfront payment of $49,000. In ?return, for the next year the firm would have access to eight hours of her time every month. As an alternative payment? arrangement, the firm would pay Professor? Smith's hourly rate for the eight hours each month. ? Smith's rate is $535 per hour and her opportunity cost of capital is 15% per year. What does the IRR rule advise regarding the payment? arrangement? (Hint: Find the monthly rate that will yield an effective annual rate of 15%?.)
What about the NPV? rule?
The IRR is?