Use the Information for the Question(s)below

question 43

Multiple Choice

Use the information for the question(s) below.
Larry the Cucumber has been offered $14 million to star in the lead role of the next three Larry Boy adventure movies.If Larry takes this offer,he will have to forgo acting in other Veggie movies that would pay him $5 million at the end of each of the next three years.Assume Larry's personal cost of capital is 10% per year.
-The NPV of Larry's three-movie Larry Boy offer is closest to:

• A)3.5 million.
• B)-1.6 million.
• C)1.6 million.
• D)-1.0 million.

---

Definitions:

Net Cash Flow

The difference between a company's cash inflows and outflows within a specific period.

CCA Pool

Refers to the Canadian Capital Cost Allowance pool, a system used for tax depreciation of property or equipment in Canada, grouping assets with similar depreciation rates.

Equipment Sale

Equipment Sale involves the process of selling tools, machinery, and other tangible assets used in operating a business.

Net Working Capital

This reflects the variance between what a business owns in the short term versus what it owes, highlighting its financial robustness and operational productivity.