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Case | HBS Case Collection | June 1992

Arundel Partners: The Sequel Project

by Timothy A. Luehrman and William A. Teichner

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Abstract

A group of investors is considering buying the sequel rights for a portfolio of feature films. They need to determine how much to offer to pay and how to structure a contract with one or more major U.S. film studios. The case contains cash flow estimates for all major films released in the United States during 1989. These data are used to generate estimates of the value of sequel rights prior to the first film's release. Designed to introduce students to real options and techniques for valuing them. It clearly illustrates the power of option pricing techniques for certain types of capital budgeting problems. Also illustrates the practical limitations of such techniques.

Keywords: Rights; Debt Securities; Contracts; Cash Flow; Valuation; Capital Budgeting; Entertainment and Recreation Industry; Motion Pictures and Video Industry; United States;

Language: English Format: Print 19 pages EducatorsPurchase

Citation:

Luehrman, Timothy A., and William A. Teichner. "Arundel Partners: The Sequel Project." Harvard Business School Case 292-140, June 1992.

Related Work

  1. Teaching Note | HBS Case Collection | February 1995 (Revised May 1996)

    Arundel Partners: The Sequel Project (TN)

    Timothy A. Luehrman

    Teaching Note for (9-292-140).

    Keywords: Motion Pictures and Video Industry; California;

    Citation:

    Luehrman, Timothy A. "Arundel Partners: The Sequel Project (TN)." Harvard Business School Teaching Note 295-118, February 1995. (Revised May 1996.)  View Details
    CiteView DetailsPurchase Related

More from these Authors

  • Case | HBS Case Collection | January 2011 (Revised December 2017)

    Tombstones

    Timothy A. Luehrman and David Lane

    This case consists primarily of excerpts from term sheets and prospectuses for six securities offerings made by US companies during 2009-2010, just after the financial crisis and recession of 2008-09. There are three issues of senior unsecured notes, one floating rate note, one equity offering, and one convertible note. The issuers are Microsoft, Coca Cola Enterprises, Norfolk Southern, IBM, Ford Motor, and Cephalon.

    Keywords: Financial Crisis; Equity; Debt Securities; Bonds; Motivation and Incentives; United States;

    Citation:

    Luehrman, Timothy A., and David Lane. "Tombstones." Harvard Business School Case 211-063, January 2011. (Revised December 2017.)  View Details
    CiteView DetailsEducatorsPurchase Related
  • Teaching Note | HBS Case Collection | January 2013 (Revised October 2014)

    Tombstones

    This case consists primarily of excerpts from term sheets and prospectuses for six securities offerings made by US companies during 2009-2010, just after the financial crisis and recession of 2008-09. There are three issues of senior unsecured notes, one floating rate note, one equity offering, and one convertible note. The issuers are Microsoft, Coca Cola Enterprises, Norfolk Southern, IBM, Ford Motor, and Cephalon.

    Keywords: Debt Securities; Financial Crisis; United States;

    Citation:

    Luehrman, Timothy A. "Tombstones." Harvard Business School Teaching Note 213-085, January 2013. (Revised October 2014.)  View Details
    CiteView DetailsPurchase Related
  • Teaching Note | HBS Case Collection | September 2012

    Stryker Corporation: Capital Budgeting (TN)

    Timothy A. Luehrman

    This case examines some parts of Stryker Corporation's systems and procedures for approving and authorizing capital spending of many different types, including buildings, machinery, and working capital for existing businesses, as well as transactions with third parties such as acquisitions, joint ventures, and licensing agreements. The case is set in early 2007, nearly two years after significant modifications in these systems and procedures. Stryker has compiled a remarkable track record of consistently high growth in profitability over more than 20 years. The modifications to its capital budgeting procedures are partly intended to support the company's efforts to continue this success.

    Keywords: capital budgeting; capital expenditures-equipment; capital expenditures-machinery; valuation; internal rate of return; discounted cash flows; net present value; Cost of Capital; Valuation; Cash Flow; System; Organizational Culture; Policy; Business Processes; Capital Budgeting;

    Citation:

    Luehrman, Timothy A. "Stryker Corporation: Capital Budgeting (TN)." Harvard Business School Teaching Note 213-039, September 2012.  View Details
    CiteView DetailsPurchase Related
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