In this case analysis, you will explore a unique sports finance deal made by the Silna family with the NBA, and analyze its Net Present Value (NPV) using discounted cash flow techniques. The case presents a real-world scenario that challenges you to apply financial valuation concepts to assess the value of a perpetual contract.

Objective: The objective of this case analysis is to calculate the NPV of the Silna family's contract with the NBA, considering various discount rates, fixed payments, and perpetuity growth rates.

Instructions:

2. Case Background:
   • Briefly summarize the history and terms of the Silna family's contract with the NBA, as outlined in the provided materials. Highlight key details such as the fixed payments, perpetuity structure, and valuation date.
5. Analysis Framework:
   • Provide an overview of the discounted cash flow (DCF) approach to valuation, emphasizing the importance of discount rates, present value calculations, and perpetuity concepts.
8. NPV Calculation:
   • Discount rate: 7.0% (default - apply to all years)
   • Fixed annual payment: $18.9 million (2009-2016)
   • Perpetuity growth rate: 2.5% (the fixed annual payment of $18.9 million grows by this amount for 2017 and onwards, in perpetuity)
   • Perform the NPV calculation for the Silna family's contract using the provided parameters.
   • Calculate the NPV for discount rates of 5.0% and 9.0% as well (two additional scenarios).
11. Results and Analysis:
    • Present the calculated NPV values for each discount rate.
    • Analyze the sensitivity of NPV to changes in the discount rate.
    • Discuss the implications of the NPV results for the Silna family and the NBA.
14. Conclusion and Recommendations:
    • Summarize the findings of the NPV analysis.
    • Provide recommendations for the Silna family based on the calculated NPV and sensitivity analysis.

Deliverables:

• Excel file (with working functions/formulas) and/or supplemental report documenting the case background, analysis framework, NPV calculations, results analysis, and conclusions/recommendations.
• A presentation summarizing the key findings and insights from the analysis, suitable for sharing with stakeholders.