What would your recommendation be to the ownership group

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The $2 billion sale of the Los Angeles Dodgers baseball team to a group that included former Los Angeles Lakers star Magic Johnson was finalized on May 2, 2102. The team had been losing money and fans, eventually going into bankruptcy. However, the new ownership group thinks they can generate a 5% return from their $2 Billion equity investment, especially when they will likely sign a $3.0 Billion, 15-year TV rights package in the next few months. The TV revenue works out to $200 million/year!
Based on your review of the attached NPV model, answer the following questions:

A.) How many years has been forecast for the economic life of the investment?
B.) Does the forecasted cash flows support the new ownership's $2.0 Billion investment at a 5% required return?
C.) What is the Internal Rate of Return for this investment?
D.) What would your recommendation be to the ownership group?

 

Reference no: EM13295949

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