Product Cannibalization at Disney

In coming up with revenues on its proposed theme parks in Thailand, Disney estimates that 15% of the revenues at these parks will be generated from people who would have gone to Disneyland in California, if these parks did not exist. When analyzing the project in Thailand, would you use a. the total revenues expected at the park?

b. only 85% of the revenues, since 15% of the revenues would have come to Disney anyway?

c. a compromise estimated that lies between the first two numbers? Explain.

Project Synergy: This is the increase in cash flows that accrue to other projects, as a consequence of the project under consideration.

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