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.

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Definitions:

Standard Deviation

A measure of the amount of variability or dispersion of a set of values.

Shopping Outlet

A retail store or point of sale offering goods to the public, often characterized by the type of products it sells or its brand affiliation.

Probability of No Retries

The likelihood that a process or event will be completed successfully on the first attempt without the need for repeating it.

Expected Value

The long-run average value of repetitions of the experiment it represents, often used in probability and statistics.