Stuart has been offered $14 million to star in the lead role of the next three Minions adventure movies. If Stuart takes this offer, he will have to forgo acting in other Despicable Me movies that would pay him $5 million at the end of each of the next three years. Assume Stuart's personal cost of capital is 10% per year. (a) Calculate the IRR for Stuart's three-movie deal offer using Excel. (b) Whether Stuart should accept or reject the offer? Briefly explain your answers.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Stuart has been offered $14 million to star in the lead role of the next three Minions adventure
movies. If Stuart takes this offer, he will have to forgo acting in other Despicable Me movies
that would pay him $5 million at the end of each of the next three years. Assume Stuart's
personal cost of capital is 10% per year.
(a) Calculate the IRR for Stuart's three-movie deal offer using Excel.
(b) Whether Stuart should accept or reject the offer? Briefly explain your answers.
Transcribed Image Text:Stuart has been offered $14 million to star in the lead role of the next three Minions adventure movies. If Stuart takes this offer, he will have to forgo acting in other Despicable Me movies that would pay him $5 million at the end of each of the next three years. Assume Stuart's personal cost of capital is 10% per year. (a) Calculate the IRR for Stuart's three-movie deal offer using Excel. (b) Whether Stuart should accept or reject the offer? Briefly explain your answers.
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