Financial management final assignment

Résumé du document

The NPV (Net Present Value) method is a standard formula that calculates the difference between the present value of cash inflows and the present value of cash outflows. This method is used for capital budgeting for a project in order to estimate the financial soundness of the project. In order to direct the length footage to the end, we have to consider and revise all costs already paid or not to help us determine how to calculate the NPV. Once you have decided to use NPV to make your determination, discuss all the costs that should be included as your initial cash outflow for each scenario. Explain why each should and should not be included in your analysis. We will look into the details of the NPV in this document.

Extraits

[...] Financial management final assignment 1. You have wisely decided to use NPV to make your determination. Discuss all the costs that should be included as your initial cash outflow for each scenario. Explain why each should and should not be included in your analysis. The NPV (Net Present Value) method is standard formula that calculates the difference between the present value of cash inflows and the present value of cash outflows. This method is used for capital budgeting for a project in order to estimate the financial soundness of the project. [...]

[...] Corporate music division can appeal to its authors or bands or musicians to make the music of the movie. Most of blockbusters and greatest movie edit their soundtrack CDs. This division can, by the way, reduce cost of musicians' research or hiring for Gus Van Sant or Johnny Depp. It will economize them in costs to just pick artist in the corporation portfolio and also generate revenues if soundtracks are sell on CDs. Another good point on costs for the studio is that the corporate music division has rights on music, and also economize on rights to paid. [...]

[...] This scenario would stay with a low budget. On the other hand, we can restart from the second scenario by making the hypothesis that Gus Van Sant will accept to shoot a blockbuster and thus will continue with the scenario of Michael Bay. In order to calculate the costs, we just have to replace Michael Bay's salary of 4,000,000$ by Gus Van Sant's one of 2,000,000$. This leads to total cost of 366,000,000$ instead of 368,000,000$. NPV in low case would be of 136,600,997$, and in high case of 153,325,170$. [...]

[...] The worst case would the stopping of the movie, in which every costs engaged would be lost You are considering including part of the costs of the studio's finance department as a cost of these films. This includes the costs of both the employees and the overhead they use (rent, electricity, phone, etc.). Should these costs be included in the analysis? Why or why not? Are there some occasions when they should be included and others when they should not? Explain. [...]

[...] But with those forecast, a blockbuster would be ignored by audience and derived products would not generate as much revenues as predicted The head of the studio in our case reports to the CEO of the corporation. The boss of the CEO is the shareholders. Describe why this is the case and explain how they supervise him. Describe also the incentives he has for acting in their interests, and not just his own. The CEO is the highest rank in a corporation, in terms of officer, and is also the chairman of the board of directors. He is in charge of the management of the entire corporation, and he has to make strategic decisions. [...]