Question: You are considering making a move. The move is expected to cost 520 milion up tront (at te0) and take a year to produce. After
You are considering making a move. The move is expected to cost 520 milion up tront (at te0) and take a year to produce. After that, it is oxpected to genenalo pesitve cash fow of $14 mition in the year it is releasod (at =2 2). In yoar 3 , the fim is expectod to genorate 342 milion as a result of DVD salos, whth cash fows decreasing by 25% in perpoluly from then on. The imelne for this project is provided below: Question A: It your movio studio makes imestment decisions basod soliy on a required paptack pericd of three yoas, would you make this movie? A. YES B. NO c. There is not enough irformation to answer this question. Question B: If your fems cost of capilal is 10\%, what is the NPV or this oppotunity? (Choose the most appropriate answer) A. $1.49 milion D. 53.57 melion c. 50.59 milion D. $6.00 milion E. $2026 milion Question C: The profitableby inder od this tim is clotest to which of the folowing? A. 0675 B. 0956 c. n2s5 D. 0744 E. 0000
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