1. Calculate NPV and IRR and use them to evaluate Entertainment's decision not to invest in the new animation studio. Was the decision appropriate and in the best interests of Riverbend Studios?

A report containing part of this year's nancial results for ivemend Studios can be found in Table 1 below. The 'Selling and admin costs' listed in Table 1 are direct to each division (not allocated), and are xed (that is, they do not change with increased/decreased production). In addition to the current year data in Table 1, there are $2,000,000 in corporate costs that should be allocated evenly between the three divisions (the allocation may seem odd, but go with it). These costs are primarily due to employee benets costs, which are billed at the corporate level. If the Parks division is closed, the decreased employee base would reduce the $2,000,000 allocated corporate costs to $1,500,000. iyerpegi Studios has a cost of capital and required rate of return 12% and income is subject to a 25% income tax rate. Before she can make any decisions, Karen needs some answers. She schedules a Zoom meeting with you, the company's accountant. Table 1: mug-amend Studios current year data Entertainment Streaming Parks Revenues $54,583,520 $30,184,570 $7,564,270 Fixed COGS $3,356,850 $4,074,530 $3,159,430 Variable COGS $40,257,310 $22,020,695 $3,698,928 # of customers 15,264,200 1,420,060 30,240 # of employees 11,562 1,954 1,378 Average net operating assets $29,014,000 $19,252,000 $420,000 Selling and admin costs $3,259,520 $944,620 $231,900