a) Ignoring for a moment the time value of money, what is the total expected rating and profit for each of the following three movies?

1. Fiction Based Movie on ABD

2. Fact Based Movie with Two Stars on BBS

3. Fiction Based Movie with One Star on CBC

b) What is the net Present Value of the profits generated from each movie?

Assume that movie 1 will be produced and aired immediately. Movie 2 will be produced and aired two years from today. Movie three will be produced and aired one year from today. Assume for simplicity that all revenues and costs for each movie will be received/paid exactly 0, 1 or 2 years from today. Assume the discount rate is 4%.

c)c. If the decision had to made today on which movie to choose, which one would you choose? Why?

Use Regression Number 4 and the following assumptions to answer this question: 0 Assume the base production cost of a movie is $2,600,000. 0 Assume it costs $200,000 more to make a Fact based movie compared to a Fictional movie. 0 Assume it costs $500,000 to hire an actor whom is considered to be a Star. 0 Assume that a network can collect $380,000 in revenue for each Rating point a movie generates. 0 Assume all the parameter estimates are statistically significant. 0 Show all your work WMmborl omnivm: RATING mm! Baa m m M! Mgr. Codi. 12.15 2.082 1.346 (I.2l3) 1.263 54:. W 0.49 0.504 0.473 0.655 0540 tveiue 25.0 4.1 2.3 (1.9) 2.3 adobe- cs DegolF. 83 R-squared- 0.35:! 99514150. 2N! a. Ignoring for a moment the time value of money, what is the total expected rating and profit for each of the following movies? 1. Fact Based Movie with 2 Stars on BBS 2. Fiction Based Movie with No Stars on BBS 3. Fiction Based Movie with 1 Star on CBC b. What is the net present value of the profits generated from each movie? Assume that movie 1 will be produced and aired immediately. Movie 2 will be produced and aired two years from today. Movie three will be produced and aired one year from today. Assume for simplicity that all revenues and costs for each movie will be received/paid exactly 0, 1 or 2 years from today. Assume the discount rate is 4%. c. if the decision had to made today on which movie to choose, which one would you choose? Why