Paramount Picture The portfolio under the structure of paramount shows that the total revenue is high asrentals play an important role to produce more earnings.
Over here, the situation is favourable for Arundel to invest asit allows at least 7. The total cost associated with this operating costs is added in order to subtract from total revenues Rental plus other.
The portfolio can make it difficult for Arundel to invest as it will bear negative cash flows as compared to the cost of negatives. The proposal of Arundel to take over the sequel of Paramount pictures can be a wrong decision to invest asthe results are clearly unfavourable to Arundel and havenegative profits as compared to the actual level of earnings.
C Fox is the third biggest studio in the category and consists of successful films productions in the past decade. This is just a sample partial work. The totalcosts are associated with all the costs incurred in the film productions. The studio has the most developed films as compared to all others and produces high revenues in rental as well as in distribution to theatres.
Sony Pictures Sony Pictures is considered the lowest choice for the company to invest as it requires highest negative cost or initial cost for the partnership in sequel projects. The total revenues other than the rentals are quite low as compared to the market valuation.
The expected value profit can be the biggest of all other studios. Over here, the situation of investment can be unfavourable to Arundel as well as it is very costly in terms of high negative costs.
Please place the order on the website to get your own originally done case solution Related Case Solutions: Warner bros can be an opportunity for Arundel to invest however,it can generate low profit margins as compared to the estimated profits.
Net profit is going to be less for the potential investors asit required high negative cost which can hinder from getting thedesired profit margins as well as it would devalue the current film production, distribution as well as exhibition. The biggest opportunity for Arundel can be to invest in W.
C Company for over one year of maturity. The future cash flows calculated through the formula of net profit exclude negative costs and rental revenues.
Therefore,in order to avail this deal, Arundel must immediately engage in a contract with W. The net cash flows also show negative performance in accordance with the calculated figures in the exhibits. Moreover, the net profit shows low profit margins because of high costs and distribution fees.
D Company studios asit has the smallest portfolio of films with some sequels.These data are used to generate estimates of the value of sequel rights prior to the first film's release. Designed to introduce students to real options and techniques for valuing them. It clearly illustrates the power of option pricing techniques for certain types of capital budgeting problems.
Arundel Partners: The Sequel Project Real options: not financial option How can Arundel partners create value? No specialized knowledge of the business Cannot make better sequels than studios Genuine possibilities for creating value Studios systematically undervalue sequel rights o Evidence: they don’t assign value to sequel rights o But.
Arundel Partners: The Sequel Project Case Solution. Need to buy sequel rights. The film industry has been enormous for its popularity over different sequels made. Since Arundel was looking for an opportunity to take over different sequels of films,duringArundel focused on investing in film studios in order to generate high profit margins.
Arundel Partners: The Sequel Project Essay Sample If Arundel Partners were to use the traditional DCF methods to find the value of the sequel rights, the NPV would be -$M loss per-film (see Appendix 1). Arundel Partners: The Sequel Project The maximum per-film price for the sequel rights that Arundel Partners should pay is $M.
If Arundel Partners were to use the traditional DCF methods to find the value of the sequel rights, the NPV would be -$M loss per-film (see Appendix 1).
for Arundel Partners would be rights to a specified percent of future cash flows of each sequel made. In the options contract it states that Arundel Partners has to purchase the rights to the sequel before production begins.
This illustrates the value creation by the production companies%(55).Download