Homework: Case Study: Compass Records
Carefully read the Compass Records case study (Carr, 2005) in the Learning Resources and become familiar with the decision that needs to be made. Then, answer the following questions:
• Assess the economic benefits of owning and producing an album versus licensing an artist's recording. What are the initial outlays under either scenario? What are the benefits over time? Do the NPV and IRR results suggest that one scenario is superior to the other?
• What uncertainties or qualitative considerations might influence your recommendation? How do variations in the forecasted sales affect the decision? Estimate the impact on NPV from a change in your estimate of future sales for Adair Roscommon's album.
• What should Alison Brown do? Prepare a recommendation as to whether Compass Records should license Adair Roscommon's next recording, or produce and own it. Explain why.
Format your homework according to the give formatting requirements:
1. The answer must be double spaced, typed, using Times New Roman font (size 12), with one-inch margins on all sides.
2. The response also includes a cover page containing the title of the homework, the course title, the student's name, and the date. The cover page is not included in the required page length.
3. Also include a reference page. The references and Citations should follow APA format. The reference page is not included in the required page length.