Question
In: Finance
You are considering making a movie. The movie is expected to cost $100 million upfront and...
You are considering making a movie. The movie is expected to cost $100 million upfront and takes a year to make. After that, it is expected to make $81 million in the first year it is released and $6 million for the following 20 years. Your cost of capital is 10%.
a.) What is the payback period of this investment? (Hint: consider that you look upfront at this, that is from year=0. For solving this task it is necessary to consider carefully the timeline of the cash flows in years=0,1,2,3,....,21,22)
The payback period is years. (round to a full year)
b.) If you require a payback period of two years, will you make the movie?
Answer: (fill in "yes" or "no")
c.) What is the NPV of this project?
The NPV is $ million. (round to two decimals)
d.) According to the NPV rule, should you make the movie?
Answer: (fill in "yes" or "no")
Solutions
jeff jeffy answered 1 year agoRelated Solutions
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10%.
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Question1Task 5 v3 You are considering making a movie. The movie is expected to cost $100...
Question1Task 5 v3
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10%.
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consider that you look upfront at this, that is from year=0. For
solving this task it...
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