Penguin productions is evaluating a film project the

Assignment Help Accounting Basics

Reference no: EM13483976

Penguin Productions is evaluating a film project: The president of Penguin estimates that the film will cost $20,000,000 to produce. In the first year, the film is expected to generate $16,500,000 in net revenue, after which the film will be released to video, Video is expected to generate $10,000,000 in net revenue in its first year, $2,500,000 in its second year and $1,000,000 in its third year. For tax purposes amortization of the cost of the film will be $12,000,000 in year 1 and $8,000,000 in year 2. The company's tax rate is 35 percent and the company requires a 12 percent rate of return on its films.

Required:
What is the net present value of the film project? To simplify, assume that all outlays to produce the film occur at time 0. Should the company Produce the film?

Reference no: EM13483976

Questions Cloud

Brunswick parts is a small manufacturing firm located in : brunswick parts is a small manufacturing firm located in eastern canada. the company founded in 1947 produces metal

Van doren corporation is considering producing a new : van doren corporation is considering producing a new temperature regulator called digidial.

Schrager company has two production departments cutting and : schrager company has two production departments cutting and assembly. july 1 inventories are raw materials 4200 work in

The boston culinary institute is evaluating a classroom : the boston culinary institute is evaluating a classroom remodeling project. the cost of the remodel will be 350000 and

Penguin productions is evaluating a film project the : penguin productions is evaluating a film project the president of penguin estimates that the film will cost 20000000 to

What was the cost per equivalent unit for conversion costs : parmentier company uses the weighted-average method in its process costing system. the molding department is the second

Powerdyne companys cost of goods sold is consistently 60 : powerdyne companys cost of goods sold is consistently 60 of sales.nbspnbspthe company plans to carry ending

The contract offer called for an immediate signing bonus of : ames hardy recently rejected a 20000000 five year contract with the vancouver seals hockey team. the contract offer

How you file the following items on form 1040 please be : how you file the following items on form 1040? please be specific and inclue any extra calculations

User Account

All Pages