Arundel Partners Case Report - Arundel Partners Case Report Kai Xiao Qinying Yan Yiwei Fang Luxin Wang Huachi Zhang 1 The idea behind sequel project was

Arundel Partners Case Report - Arundel Partners Case Report...

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Arundel Partners Case Report Kai Xiao, Qinying Yan, Yiwei Fang, Luxin Wang, Huachi Zhang 1. The idea behind sequel project was to create an investment group, Arundel Partners, which would purchase the sequel rights associated with films produced by one or more major us movie studios. Investors in Arundel Partners will exercise their right and make the sequel or sell it to the highest bidder only when the first movie was successful. The investors will rely heavily on good estimates of the rights’ present value on the exercise date. Note that movies under 2 million budget will not be considered in this project. 2. Valuation: Part 1: Using the data for hypothetical sequels in exhibit 7, we find the present value at year 4 and the present value of the negative cost at the 3 rd year. The decision of whether to invest in the next sequel is made on Year 3, as we have to consider if the film is profitable. Considering the present value valuation method, only the films with positive NPV will considered to be valuable.

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