4) Suppose that Arundel purchases the sequel rights to all 99 movies from Exhibit 7 and...
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4) Suppose that Arundel purchases the sequel rights to all 99 movies from Exhibit 7 and chooses to only exercise the rights to the sequels that seem profitable. That is, those hypothetical sequels from Exhibit 7 that have a one-year return greater than 12 percent. a. How many sequels would Arundel produce? b. What is the total PV of net inflows at t=4 from these sequels? C. What is the total cost at t=3? d. What is the NPV of producing these sequels? e. What is the maximum Arundel would be willing to pay for the 99 sequel rights? 4) Suppose that Arundel purchases the sequel rights to all 99 movies from Exhibit 7 and chooses to only exercise the rights to the sequels that seem profitable. That is, those hypothetical sequels from Exhibit 7 that have a one-year return greater than 12 percent. a. How many sequels would Arundel produce? b. What is the total PV of net inflows at t=4 from these sequels? C. What is the total cost at t=3? d. What is the NPV of producing these sequels? e. What is the maximum Arundel would be willing to pay for the 99 sequel rights?
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