This is my assignment and I'm unsure of where to start.

Pioneer Films has just finished a production ofSharknado 5, the latest action film directed by John Favreau and starring Ian Ziering, Tara Reid and George Clooney. The total production cost was $5million. All the production personnel and actors onSharknado 5received a fixed salary (included in the $5 million) and will have no"residual"(equity interest) in the revenues or operating income from the movie. Daniels Communications will handle the marketing ofSharknado 5.Daniels agrees to invest a minimum of $3 million of its own money in marketing the movie and will be paid 20% of the revenues Pioneer itself receives from the box-office receipts. Pioneer receives 62.5% of the total box-office receipts (out of which comes the 20% payment to Daniels).

1. What is the breakeven point to Pioneer forSharknado 5expressed in terms of (a) revenues received by Pioneer and (b) total box-office receipts?
2. Assume in its first year of release, the box-office receipts forSharknado 5total $300 million. What is the operating income to Pioneer from the movie in its first year?

A year goes by and Pioneer is negotiating forSharknado 6, the thrilling sequel to the mega-blockbusterSharknado 5. The negotiation is proving more difficult than the original movie. The budgeted production cost (excluding payments to the director Favreau and the stars Reid and Ziering) forSharknado 6is $21 million. The agent negotiating for Favreau, Reid and Ziering proposes either of two contracts:

Contract A: Fixed-salary component of $15 million for Favreau, Ziering and Reid (combined) with no residual interest in the revenues fromSharknado 6.

Contract B: Fixed-salary component of $3million for Favreau, Ziering and Reid (combined) plus a residual of 15% of the revenues Pioneer received fromSharknado 6.

Daniels will marketSharknado 6. It agrees to invest a minimum of $10 million of its own money. Because of its major role in the success ofSharknado 5, Daniels will now be paid 25% of the revenues Pioneer received from the total box-office receipts. Pioneer receives 62.5% of the total box-office receipts (out of which comes the 25% payment to Daniels).

1. What is the breakeven point for Pioneer expressed in terms of (a) revenues received by Pioneer and (b) total box-office receipts forSharknado 6forCONTRACTS A AND B? Explain the difference between the breakeven points for contracts A and B.
2. AssumeSharknado 6achieves the same $300 million in box-office revenues asSharknado 5. What is the operating income to Pioneer fromSharknado 6if it accepts Contract B? Discuss the difference in operating income between the two films.