Metro Wildlife Parks

Case Prompt

Your client is the CEO of Metro Wildlife Parks, a privately owned zoo operator based in New York City.

The CEO is interested in investing in a new attraction, specifically, acquiring a liger (a cross between a lion and a tiger), to showcase at the zoo.

She has hired you to help determine whether this investment is financially attractive.

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General response summary

Given the prompt, the candidate should structure this as an investments question. The candidate should develop a framework that addresses whether the investment in a Liger is advisable (NPV Positive). In other words, what will adding a Liger do to ticket sales, merchandise sales, and show sales and do these outweigh the costs? To solve this case, the NPV of the incremental profit needs to be solved for.

After the framework, The following information can be provided only if requested.

Objectives/Targets:

• Return on Investment of >14%. ROI can be defined here as NPV of total Profit / NPV of Total Investment

Zoo Specifics:

• Location – New York City

• Products & Services – Ticket sales, merchandise sales, shows. Most animals that you see at a zoo are already present

• Competition – No other zoos in the immediate area

• What is a Liger – a cross between a lion and a tiger (this is a real animal)

Zoo Profit Metrics:

• Visitors per year – 600,000 (50% Adults, 50% children)

• Ticket Prices – Adult: $17, Children: $11

  • Ticket Revenue = $8.4M

• Merchandise Sales – 10% of total ticket revenue ($840k)

• Shows Sales – 5% of total ticket revenue ($420k)

• Total Revenue: $9.66M

• Current Costs: ~$8.7M

• Current Profit Margin: 10%