Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

I have a friend who offered me an opportunity to invest in the Fyre Festival version 2.0[1]. He said that it will be highly successful

I have a friend who offered me an opportunity to invest in the Fyre Festival version 2.0[1]. He said that it will be highly successful and became the new Coachella or Ultra. It first version will be in 2021 and they are planning to do it in an island in Miami, they said that they are in discussions with Brickell Key Island and Grove Isle.

He said that I should invest $1MM now and I will receive a share of the profits in each of the 4 next Festivals. He mentioned that the estimation of my share of the profits that they calculated is the following one:

2020: $300,000

2021: $450,000

2022: $600,000

2023: $700,000

Use a discount rate of 12% and as benchmark for recover the initial investment is 3 years, calculate and answer:

  1. Calculate IRR, should I invest according to this tool?
  2. NPV, should I invest according to this tool?
  3. Payback period, should I invest according to this tool?

[1] If you do not know what it was Fyre, I suggest watching the documentary about it: FYRE: The Greatest Party That Never Happened in Netflix or Fyre Fraud in Hulu.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Finance And Strategy Inside China

Authors: Check-Teck Foo

1st Edition

9811328404,9811328412

More Books

Students also viewed these Finance questions