Hire Writer Roundel Senior Management: After a thorough investigation into the venture you are considering, we have the following data and analysis for your review. In order for you to make a more informed decision, we have also provided recommendations for this endeavor based off our findings. Throughout the entirety of this report, we have taken many different approaches to better survey this idea so you can make a more informed decision.
Film After a thorough investigation into the venture you are considering, we have the following data and analysis for your review.
In order for you to make a more informed decision, we have also provided recommendations for this endeavor based off our findings. Throughout the entirety of this report, we have taken many different approaches to better survey this idea so you can make a more informed decision.
We have formatted this formal report to be easy to understand, as well as, comprehensive. This value can be looked at as the maximum price to pay, given that it is the highest value you can expect to earn. If the agreed upon per-film price exceeded the derived values, you will be out-of-the-money.
Conclusion After carrying out each valuation approach, we found maximum price to pay per film was around the same under each method.
This figure is the most conservative value we found throughout our real options analysis. Problem Statement The investment group, Arundel Partners, is seeking to create an innovative business where the ability to create and produce movie sequels is transformed into an option market.
This will be achieved in two ways: It is imperative that Arundel agrees on the sequel rights price prior to any movie being created. If they waited, the various production studios would have more information on hand about the possible success or failure of each film, causing the negotiated price to fluctuate unfairly.
With the sequel rights and complete movie revenue data, Arundel can decide which movies will contribute to a profitable sequel and which will not. Successfully forming this business brings a number of problems to the surface.
Arundel Partners must figure out how much money they should spend on each film in order to make a profit. In determining this figure, hypothesized sequel revenues are estimated based on the first film data. This is risky because they are just projected revenues, but they are being used to make multi-million dollar business decisions.
This figure could be viewed as the revenue in millions Arundel could expect to receive from the sequel of each of the 99 films purchased. It is important to note that they would not create a sequel for every movie; they would only create a sequel if it were profitable to do so. Exhibit 7 shows the expected present values and one-year holding period returns.
First, we discounted the hypothetical sequel net inflows back to year three to match the period of the hypothetical sequel negative cost.
We used an effective annual rate of Then we subtracted the year three negative costs from the year three net inflows, leaving us with the NPV in year three. We then discounted the year three NPV back to year zero, when Arundel would be purchasing the portfolio of movies.
Although this value is only made up of 26 films, they will be purchasing all 99 sequel rights. Decision Tree Analysis We also used the binomial model to construct a decision tree to find the max value Arundel should pay for the sequel rights per movie.
We discounted using For our time variable, we are using 12 periods symbolizing the 12 months between the distribution of the first movie and the hypothetical sequel. We used a standard deviation of 1.
We then found the U and D values to construct a 12 period binomial tree.Welcome to the world of case studies that can bring you high grades! Here, at alphabetnyc.com, we deliver professionally written papers, and the best grades for you from your professors are guaranteed!
This case report discussed the financial and business situation of an investment group, Arundel Partners. Arundel partners focused its investments on the sequel rights of that ‘associated with firms produced by one or more major U.S.
movie studios’. Case 3: Arundel Partners 1. Arundel has an interesting idea to buy rights to movie sequels.
Their theory is that they can make a profit by securing sequel rights and providing seed capital to films even before production starts, thus avoiding the asymmetric information problem that would arise as the film progresses and the studio gains more and more inside information about the film's prospects.
Arundel partners should approach the major studios with an offer of $ million per film.
Inquiries suggested studios would be tempted at $2 million Arundel should expect to make $2,, ($5,,$2,,). Arundel partners should approach the major studios with an offer of $ million per film. Inquiries suggested studios would be tempted at $2 million Arundel should expect to make $2,, ($5,,$2,,).
Arundel Partners Case Analysis Executive Summary: A group of investors (Arundel group) is looking into the idea of purchasing the sequel rights associated with films produced by one or more major movie studios.
Movie rights are to be purchased prior to films being made.