Analysis of “The Interview” JESSICA MATHES, HARSH MOTA, RUSSELL PANG, JEFFREY MARSCHKE

Task 1: Dec 31, 2013

Data Chosen for Use * Ferrari, Mark J., and Andrew Rudd. "Investing in Movies." Journal of Asset Management 9.1 (2008): JSTOR. Web. 7 Feb. 2015

Data Chosen for Use

Data Chosen For use

Calculating Multiple Average Worldwide Box Office Revenue Earned Per Dollar Invested (AWBOREDI) Broke data into three categories and calculated average multiple within each ◦Bear, Base, Bull

Revenue Streams and Percentages Worldwide Box Office (50%) Other (50%) ◦DVD ◦Blue Ray ◦DVD Rental ◦Blue Ray Rental ◦EST ◦VOD/PPV

Revenue Streams and Percentages *Palank, Michael. "2012 State of Media Presentation." 2012 State of Media Presentation. N.p., 11 Jan Web. 07 Feb

Revenue Attribution Per Year

Weighted Average Cost of Capital (WACC) Used industry averages CAPM model for Return on Equity ◦Risk Free rate – 3.6% ◦Beta – 1.57 ◦Market Risk Premium – 5% Cost of Debt ◦Moody’s bond rating Baa3 – 7% WACC – 8.63% rounded to 9%

Assigning Probabilities Ballpark Figure for Box Office Revenue: ◦$ million

Assigning Probabilities

Net Present Value NPV: $ 116,810,395

Task 2: Dec 16, 2014

Task #2: Threats from North Korea Specific Threats Adjust WACC to 10% ◦Reflect the additional uncertainty ◦Risk averse movie goers ◦Age groups ◦Recent events Alter the proportions relating to the scenarios ◦Reflect a higher chance of not earning incomes

Net Present Value NPV: $ 23,022,110

Task 3: Dec 20, 2013

Task 3: No Movies in Theaters Do not change ticket prices for movies Increase the DVD Prices Projected NPV is -$34million

Net Present Value NPV : ($34,324,099)

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