The following questions are from the Compass Records case study:

1. Using the base model in the attached spreadsheet, please assess the economic benefits of owning and producing an album versus licensing an artists recording. What are the initial outlays under either scenario? What are the benefits over time? Do the NPV and IRR results suggest that one scenario is superior to the other?

2. What uncertainties or qualitative considerations might influence your recommendation? How do variations in the forecasted sales affect the decision? Please estimate the impact on NPV from a change in your estimate of future sales for Adair Roscommons album. You may copy your base model to another worksheet and conduct sensitivity analysis using the excel data table.

3. What should Alison Brown do? Prepare a recommendation as to whether Compass Records should license Adair Roscommons next recording, or produce and own it.