Assignment: Case Study: Compass Records (Case 22)
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:
- Please 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? Please 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.
6 years ago
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