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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
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.
- Explain why the NPV decision rule might provide Larry with a different decision outcome than the IRR rule when evaluating Larry's three-movie deal offer.
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