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Value of Operations

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!
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Category: Sample Questions