Use the Information for the Question(s)below

question 48

Multiple Choice

Use the information for the question(s) below.
An independent film maker is considering producing a new movie.The initial cost for making this movie will be $20 million today.Once the movie is completed,in one year,the movie will be sold to a major studio for $25 million.Rather than paying for the $20 million investment entirely using its own cash,the film maker is considering raising additional funds by issuing a security that will pay investors $11 million in one year.Suppose the risk-free rate of interest is 10%.
-What is the NPV of this project if the film maker invests his own money and does not issue the new security? What is the NPV if the film maker issues the new security?

• A)$1.7 million;$1.7 million
• B)$1.7 million;$2.7 million
• C)$2.7 million;$1.7 million
• D)$2.7 million;$2.7 million

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Definitions:

ANN

Artificial Neural Network, a computing system inspired by the neural networks that constitute animal brains, designed to pattern its way of processing information after how humans think and learn.

Desired Result

The intended or sought after outcome of a process or action, often used as a benchmark for success or quality in projects.

Customer Service Representative

An individual responsible for handling inquiries, support, and complaints from customers, often through direct interaction channels.

B2B

Business-to-Business, a transaction or business model involving the exchange of products, services, or information between companies.