You are a Financial Manager employed by Pepper Studios ('Pepper'), a company that makes feature films. Pepper produces and distributes films globally, in partnership with external investors.

You receive the following email from the Finance Director:

Prepare a report presenting an analysis of the figures provided, including a recommendation as to what film or films Pepper Studios should invest in this year.
You should provide an analysis for the same lead actor being used in 'The Next Day of Summer' and 'Lost Property 2' and an analysis where different lead actors are used. Please advise on other factors which should be considered in making this decision, including a brief explanation of capital rationing.

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From: Finance Director To: Date: Financial Manager today Subject: film investments 2021 We now have to finalise our decision on our next film production. While the additional marketing spend should generate future income it does affect our ability to invest in our original film choices for 2021. Our available budget for investment next year is now $420m. I have attached your original summary of our short listed films for the year. I would really like to be able to commit to all four as they all provide a good return, but I know that is not possible. There is the additional complication that there is a possibili- ty that we could use the same lead actor for both The Next Day of Summer and Lost Property 2. Although this is not decided, I would like this to be taken account of when looking at our film choices for next year. I need you to prepare a detailed report so that we can make an informed decision about this at the next board meeting.