Question
The Fab Five are planning on launching a new Netflix series. But which one? Antoni could lead a sizzling cooking show which would cost $450,000
The Fab Five are planning on launching a new Netflix series. But which one? Antoni could lead a sizzling cooking show which would cost $450,000 to shoot, but is guaranteed to earn $200,000 for the first year, then $100,000 for 3 more years, and finally $50,000 in its fifth year. Jonathan could just sit in front of the camera and be great for $100,000 to shoot, but hed only earn cash flows of $25,000 for the next 7 years. There is the potential for Bobby to create a home makeover show which would cost $600,000 to make, but hed earn them $300,000 the first year then $250,000 the next two years. Lastly, Tan and Karamo could produce a show about cultural influences on fashion. It would cost $200,000 to shoot and earn $50,000 for the first 2 years, then $100,000 for the next 2 years. Interest rates are currently 12%.
Which project is expected to be most profitable? If funding wasnt an object, which show(s) should they create?
(Use Excell and use your knowledge about NPV, IRR, and scenario analysis method)
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