Question

In: Finance

You are considering making a movie. The movie is expected to cost $11.4 million up front...

You are considering making a movie. The movie is expected to cost $11.4 million up front and take a year to produce. After that, it is expected to make $5.1 million in the year it is released and $2.3 million for the following four years. What is the payback period of this investment? If you require a payback period of two years, will you make the movie? Does the movie have positive NPV if the cost of capital is 11.2% ?

Solutions

Expert Solution

a) Payback period = 3.74 years

b) If payback period is 2 years, the move should not be made

c) NPV is negative if the cost of capital is 11.2%


Related Solutions

You are considering making a movie. The movie is expected to cost $10.2 million up front...
You are considering making a movie. The movie is expected to cost $10.2 million up front and take a year to produce. After that, it is expected to make $4.6 million in the year it is released and $1.7 million for the following four years. What is the payback period of this investment? If you require a payback period of two years, will you make the movie? Does the movie have positive NPV if the cost of capital is 10.5%?...
You are considering making a movie. The movie is expected to cost $10.7 million up front...
You are considering making a movie. The movie is expected to cost $10.7 million up front and take a year to produce. After​ that, it is expected to make $4.9 million in the year it is released and $1.7 million for the following four years. What is the payback period of this​ investment? If you require a payback period of two​ years, will you make the​ movie? Does the movie have positive NPV if the cost of capital is 10.3%​?...
You are considering making a movie. The movie is expected to cost $10.8 million up front...
You are considering making a movie. The movie is expected to cost $10.8 million up front and take a year to produce. After? that, it is expected to make $4.1 million in the year it is released and $1.7 million for the following four years.a) What is the payback period of this? investment?b) If you require a payback period of two? years, will you make the? movie? Does the movie have positive NPV if the cost of capital is 10.6%??npv...
You are considering making a movie. The movie is expected to cost $10.6 million up front...
You are considering making a movie. The movie is expected to cost $10.6 million up front and take a year to produce. After​ that, it is expected to make $4.9 million in the year it is released and $1.7 million for the following four years. What is the payback period of this​ investment? If you require a payback period of two​ years, will you make the​ movie? Does the movie have positive NPV if the cost of capital is 10.3%​?
You are considering making a movie. The movie is expected to cost $10.1 million up front...
You are considering making a movie. The movie is expected to cost $10.1 million up front and take a year to produce. After​ that, it is expected to make $4.1 million in the year it is released and $1.9 million for the following four years. What is the payback period of this​ investment? If you require a payback period of two​ years, will you make the​ movie? Does the movie have positive NPV if the cost of capital is 10.1%​?
You are considering making a movie. The movie is expected to cost $10.5 million up front...
You are considering making a movie. The movie is expected to cost $10.5 million up front and take a year to produce. After​ that, it is expected to make $4.3 million in the year it is released and $1.9 million for the following four years. What is the payback period of this​ investment? If you require a payback period of two​ years, will you make the​ movie? Does the movie have positive NPV if the cost of capital is 10.5%​?
You are considering making a movie. The movie is expected to cost $10.2 million up front...
You are considering making a movie. The movie is expected to cost $10.2 million up front and take a year to produce. After​ that, it is expected to make $4.3 million in the year it is released and $1.6 million for the following four years. What is the payback period of this​ investment? If you require a payback period of two​ years, will you make the​ movie? Does the movie have positive NPV if the cost of capital is 10.4%​?
You are considering making a movie. The movie is expected to cost 10.5 million up front...
You are considering making a movie. The movie is expected to cost 10.5 million up front and take a year to produce. After that, it is expected to make 4.9 million in the year it is released and 1.7 million for the following four years. What is the payback period of this investment? If you require a payback period of two years, will you make the movie? Does the movie have positive NPV if the cost of capital is 10.2%?...
You are considering making a movie. The movie is expected to cost $10.9 million up front...
You are considering making a movie. The movie is expected to cost $10.9 million up front and take a year to produce. After​ that, it is expected to make $4.9 million in the year it is released and $1.8 million for the following four years. What is the payback period of this​ investment? If you require a payback period of two​ years, will you make the​ movie? Does the movie have positive NPV if the cost of capital is 10.6%​?
You are considering making a movie. The movie is expected to cost $10.9 million up front...
You are considering making a movie. The movie is expected to cost $10.9 million up front and take a year to produce. After​ that, it is expected to make $4.9 million in the year it is released and $1.8 million for the following four years. What is the payback period of this​ investment? If you require a payback period of two​ years, will you make the​ movie? Does the movie have positive NPV if the cost of capital is 10.6%​?...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT