Question Value of Operations Netflix, Inc. (In Millions) Value of operations Actual Projected 2013 L

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Value of Operations Netflix, Inc. (In Millions) Value of operations Actual Projected 2013 Long-term growth rate Weighted Avg. Cost of Cap. (WACC) Free Cash Flow ( CFn x (1+ g) ) / (r – g) Horizon Value #DIV/0! PV of the horizon value and of the free cash flows. PV of Horizon Value @ WACC #DIV/0! PV of free cash flows @ WACC $- Value of Operations #DIV/0! Weighted Average Cost of Capital Netflix, Inc. Formula WACC = Weighted average cost of capital rD (1- Tc )*( D / V )+ rE *( E / V ) Where: rD = The required return of the firm's Debt financing (1-Tc) = The Tax adjustment for interest expense (D/V) = (Debt/Total Value) rE = the firm's cost of equity (E/V) = (Equity/Total Value) WACC Calculation rD = (1-Tc) = (D/V) = #DIV/0! rE = 0.00% (E/V) = #DIV/0! Total Debt D = Total Equity E = Total Firm Value = rE = rf+B(rM-Rf) = Risk Free rate rf = Historical Mkt return rm = Beta = Average Beta of 2.03 and 0 as quoted below. WACC = #DIV/0! Additional Data Last Sale: $417.83 Share Volume: 4,179,281 Today's High: $421.74 Best Bid: N/A 52 Week High: $458 Earnings Per Share (EPS): $2.66 NASDAQ Official Open Price: $415.52 NASDAQ Official Close Price: $417.83 Net Change: 2.63 ? 0.63% Previous Close: $415.20 Today's Low: $411.61 Best Ask: N/A 52 Week Low: $205.75 P/E Ratio: 157.08 Date of Open Price: 30-May-14 Date of Close Price: 30-May-14 http://www.nasdaq.com/symbol/nflx#ixzz33QWjU6c2 Source: nasdaq.com Source:http://www.google.com/finance?cid=4592563 Instrinsic Value Using the Discount Cash Flow Method Netflix, Inc. Cash Flow Statement ( in millions) Actuals 2009 2010 2011 2012 2013 2014 (Q1) Cash from Operating Activities Capital Expenditure Free Cash Flow $- $- $- $- $- $- Capital Expenditure Adjustments Free Cash Flow after Adjustments $- $- $- $- $- $- Growth (excluding adjustments) #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! Average Growth (2009-2013) (1) #DIV/0! Discount Cash Flow Formula DCF= CF1/(1+r)^1+cf2/(1+r)^2+…+CFn/(1+r)^n Where, CF= Cash Flow r= discount race (WACC) (1) Growth is calculated by taking the weighted average of FCF changes from 2009-2013 Terminal Growth Rate #DIV/0! (2) 2013 FCF forecast 2012 Cash Flow from operations Actuals $- 2013 Cash Flow from operations Actuals $- 2013 Free Cash Flows $- 3) WACC #DIV/0! Discount Free Cash Flow Calculation ( in millions) Yr1 Yr2 Yr3 Yr4 Yr5 Yr6 Yr7 Yr8 Yr9 Yr10 DFCF – – – – – – – – – – Discount Factor (@ 11.24% =r=WACC)= (1+r)^n #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! Discounted FCF #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0! Horizon Value Formula ( CFn x (1+ g) ) / (r – g) g= #DIV/0! r= #DIV/0! Horizon Value Calculation #DIV/0! Present Value of Cash Flow in Year N=10 Formula CF at Year N / (1 + R)^N PV of Cash Flow in Year 10 Calculation #DIV/0! Netfiix Instrinsic Value DFCF YR1 #DIV/0! DFCF YR2 #DIV/0! DFCF YR3 #DIV/0! DFCF YR4 #DIV/0! DFCF YR5 #DIV/0! DFCF YR6 #DIV/0! DFCF YR7 #DIV/0! DFCF YR8 #DIV/0! DFCF YR9 #DIV/0! DFCF YR10 #DIV/0! PV of CF YR10 #DIV/0! #DIV/0! Intrinsic Value #DIV/0! /  Shares Outstanding = Price Estimate per Share #DIV/0! Market Value Netflix, Inc. (In Millions) Firm's Market Value As of Firm's Market Value = Total of Outstanding share x market value Outstanding Shares Stock Price Firm's Market Value $0.00 Firm's Market Value To Date Firm's Market Value = Total of Outstanding share x market value Outstanding Shares Stock Price Firm's Market Value $0.00

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