Essay Arundel Partners Guidelines

All of the cash flows are discounted back to the year of 2002 in the calculation of NPV value. With the annual cost savings of $80 from 2003 to 2007 and the integration cost of total $130, Timken’s new NPV is calculated to be -$970.42.

Free cash flows of the project for next five years can be calculated by adding depreciation values and subtracting changes in working capital from net income. In 2010, there will be a cash outflow of $2.2 million as capital expenditure. In 2011, there will be an additional one time cash outflow of $300,000 as an advertising expense. Using net free cash flow values for next five years and discount rate for discounting, NPV for the project comes out to be $2907, 100. The rate of return at which net present value becomes zero i.e.

We assume that Arundel Partners will purchase a portfolio of films similar to one used in the analysis. The average hypothetical net inflow of the sequel ($21.57M) is used to figure out the value of the state variable for the real options model. The state variable is the average hypothetical net inflow of the sequel, discounted using a WACC of 12.36% back to 1989. Discounting back to 1989 is important because this is

A group of investors (Arundel group) is looking into the idea of purchasing the sequel rights associated with films produced by one or more major movie studios. Movie rights are to be purchased prior to films being made. Arundel wants to come up with a decision to either purchase all the sequel rights for a studio's entire production during a specified period of time or purchase a specified number of major films. Arundel's profitability is dependent upon the price it pays for a portfolio of sequel rights. Our analysis of Arundel's proposal includes

The company will not exercise the sequel right if they predict that the sequel will not be profitable based on the first movies’ performances. The downside of the investment is removed when we purchase the sequel right. To get an estimate of the call price, we use the average of PV of net inflows as the underlying asset, PV of negative costs as exercise price, standard deviation of return as volatility, and 1992 T-bill rate as the risk free rate. After plugging in these numbers into the Black-Scholes formula, we calculated that the average cost for a sequel option should be 9.2728.

During the period of 5 years (from 1994 to 1998), if the discount rate is 20%, Waltham plant is the only one that has a positive amount in NPV. The total net present value of this plant is approximately $6.4 million, while the other two plants have a negative number (Santa Clara: negative $3,882,499; Greenfield: negative $29,386,827).

15. What is the Present Value (NPV) to Sterling of the base investment using FCF for 2013-2033?

My interest for the Attorney Advisor position with the United States Patent & Trademark Office (USPTO) arises from my longstanding commitment to constantly improve myself. I have always enjoyed legal research, writing, and the complexities of intellectual property. I have no doubt that my enthusiasm to research, my eagerness to learn, and my strong ability to communicate clearly, work efficiently, accurately, and quickly, will make me an invaluable asset to the USPTO. I believe these traits combined with my unique skillset, developed as a result of experiences working for the Arizona Diamondbacks of Major League Baseball (Diamondbacks), Nike Inc. (Nike), and the Arizona Attorney General’s Office, Liability Management Department (AG Office)

Anne Arundel Community College (AACC) is a two-year public, community-driven institution of higher education. It is one of the oldest and largest community colleges within the state of Maryland. Anne Arundel Community College offers transfer and career associate degree programs; certificate programs; credit courses; and continuing education, workforce development and lifelong learning opportunities. AACC is a single-campus community college with a main campus in Arnold, off -campus sites at Arundel Mills in Hanover; the Glen Burnie Town Center; the Sales and Service Training Center in Arundel Mills mall; the Hotel, Culinary Arts and Tourism Institute in Glen Burnie; and the Center for Cyber and Professional Training across from Arundel

Arundel can make money selling the rights to a higher bid. Another option to make money is by producing the sequel exercising its rights but this will depend on if the net present value of the production movies is higher than the amount of buying the rights. If the future positive cashflows are undervalued Arundel can seek an arbitrage

From Exhibit 4 the NPV is about $1.5 million. There initial investment is $400,000. Without included debt payments this appears attractive. However, the NPV should include the debt payments for a useful NPV. This reduces the NPV significantly. The investors double their money and the investment appears viable.

3. What are the primary advantages and disadvantages of the prior approaches, DCF and Black-Scholes, that you took in valuing the rights? Please be specific about their assumptions. What further assistance or data would you require to refine your estimate of the right’s value?

After evaluation of the proposed acquisition of the movie sequel rights, we recommend to offer movie studios as a per-movie price to purchase the sequel rights for their entire portfolio of movies the studios are going to produce over the next year.

If the labor cost will increase 40% in the next 10 years, that means it’ll increase 3.4% annually, so the NPV of costs will be $73,751,039.

Based on our valuation of the investment, as outlined below in the Analysis portion of the report, we have determined a per-movie-value of $8.9 million when considering purchasing the rights to the entire portfolio of 99 movies analyzed in the sample data. Based on production of 10 sequels, the per-movie-value of the portfolio would be $52.25 million. Our calculations based on the hypothetical portfolio is that Arundel Partners should make this investment as long as the present value of the expected cash flows from the sequel revenues exceeds the cost of production plus the cost of the investment. Depending on what value a studio will accept as payment per sequel, there appears to be significant profitability in the investment.