Free essay on arundel partners case analysis for a portfolio of sequel rights our analysis of arundel’s proposal includes a net present value calculation . Based on this information, what is the value per sequel right at time 0 consider the following facts about the 99 hypothetical sequels the average negative cost (exercise proce) at time 3 of the 99 hypothetical sequels is $226 million the average cash inflow of the 99 films (the asset) at time 4 = 216 million. Arundel partners is trying to take advantage of the uncertainty 26 out of 99 movies have a sequel with a positive net present value (npv) average cash . 1 why do the proponents of this venture believe that arundel partners can make money buying movie sequel rights why do they propose buying a portfolio of rights rather than negotiating the purchase price on a film-by-film basis. Since the partners do not have experience in the movie making industry and those on the other side of the negotiating table do, it would be easier for the movie industry executive to figure out which movie would be a hit and which would be a miss and try to sell arundel the rights to only those movies that will not be followed by a successful sequel.
The research paper on arundel case study per film option price we took the negative cost for the hypothetical sequel and discounted it back to year 2, the time that arundel have on the price of the call option of the sequels. Arundel partners: the sequel project the maximum per-film price for the sequel rights that arundel partners should pay is $512m if arundel partners were to use the traditional dcf methods to find the value of the sequel rights, the npv would be -$842m loss per-film (see appendix 1). Sequel rights also expire 3 years from the films initial release note that arundel must declare, based on the profitability of the first release, whether or not it will produce the sequel, prior to the expiration of the rights at year 4. In exhibit 7 we find the present value at year 4 and the pv of the negative cost arundel partners: the sequel project the maximum per-film price for the sequel .
Arundel partners case 11 assuming not be followed by a successful sequel 21 npv by a profitable sequel, ie 26 since arundel will have an option to . Arundel partners the sequel project solution arundel partners the sequel project solution pdf sequel rights the npv would be 8 42m loss per film see appendix 1. Arundel partners the sequel project case solution,arundel partners the sequel project case analysis, therefore, the negative npv invalidates our decision.
The making of a sequel becomes a 100% business decision and the decision belongs to the entity that owns the sequel's rights conversely, if the making of a sequel doesn't make business sense, arundel reserves the right to refuse the making of this one or sell back to the studio the right to make it. - new and improved npv bm: chapter 22 and pages 268-278 arundel partners: the sequel project n9-292-140 (case due: jan 30th) arundel partners case questions. Citation: luehrman, timothy a arundel partners: the sequel project (tn) harvard business school teaching note 295-118, february 1995 (revised may 1996). 1 introduction in 1992, arundel partners was looking into the idea of purchasing the sequel rights associated with films produced by one or more major movie. Bmgt 741 – advanced financial management (ie, net present value, arundel partners: the sequel project 1.
Arundel_objques_coles_6210_fall2015 objectives and case questions david eccles school of business jeff coles arundel partners: the sequel what is the npv of . Arundel will be exercising the option at t=1 however, so the cost is discounted to t=1 as follows: sequel exercise pricet=1= sequel exercise pricet=3(1+r)t= $6381122$509 million with an accurate exercise price, asset value can be used to determine the overall option value of purchasing rights to all 99 movies. Why do the partners want to buy the portfolio of sequel rights in advance of the movies production they could instead negotiate for the rights to the sequels film-by-film some time after production has begun or even after the original film has been released the principals believe that they can make money by buying options on movie sequel rights. Why do the principals of arundel partners think they can make money buying movie sequel rights why do the partners want to buy a portfolio of rights in advance rather than negotiating film-by-film to buy them estimate the per-film value of a portfolio of sequel rights such as arundel proposes to buy.
Arundel partners the sequel project case solution - arundel partners can be a financial company that's average npv at year 0, maximum payment per sequel . “arundel partners: the sequel project” state option and sequel option and sequel formula-based sequel option values compare with more naive . Arundel partners - intro & questions arundel partners: the sequel project introduction and questions prof hugues pirotte arundel partners npv uploaded by. Case study 5: arundel partners the sequel project alfred frances lucas hennessey rick piket the npv at time zero of producing a sequel is -236 million .
In contrast, the traditional npv r ule fo-cuses on the traded asset in order to find the adequate discount rate it implicitely values t he inv estment b y as-. Solutions to arundel partners studios from which they intend to purchase sequel rights the net present value of hypothetical sequels taken from the . Case analysis - arundel partners our analysis of arundel’s proposal includes a net present value calculation of and arundel thought a sequel would . arundel partners: the sequel project the maximum per-film price for the sequel rights that arundel partners should pay is $512m if arundel partners were to use the traditional dcf methods to find the value of the sequel rights, the npv would be -$842m loss per-film (see appendix 1).