To prepare for this Assignment, use the Netflix and Amazon Data Spreadsheet, located in this week’s...

Question

To prepare for this Assignment, use the Netflix and Amazon Data Spreadsheet, located in this week’s Learning Resources, to generate a pro forma forecast and consider what this indicates about the future for these two companies.

In a 1- to 2-page paper, provide the following:

A forecast of Netflix, Inc., and Amazon.com, Inc.’s revenue, costs, and estimated cash flows into the next five years.
The appropriate discount rate for Netflix, Inc., and Amazon.com, Inc.’s forecasted cash flows.
An appropriate risk-adjusted rate of return for use in evaluating an investment in Netflix, Inc., and Amazon.com, Inc.
A determination of the estimated fair market value of 100% of Netflix, Inc., and Amazon.com, Inc.’s equity.

005_9takajo-1milox3d.xls

Robert · Accepted Answer

Netflix is one of the leading service providers of online media and streaming video on demand 
and DVD by mail. On the other hand, Amazon is a prestigious name in e-commerce business that 
facilitates the online shopping in huge portfolio of consumer goods.  
The projected revenue of Netflix and Amazon for the next five years from 2015 to 2019 are as 
follows: 
Netflix           USD Million 
 
2015 2016 2017 2018 2019 
Projected revenue $6,800.14 $8,399.99 $10,376.22 $12,817.40 $15,832.90 
Projected cost $4,791.96 $5,919.34 $7,311.97 $9,032.23 $11,157.21 
Projected Free Cash flow $334.39 -$873.58 $2,282.18 -$5,962.05 $15,575.49 
 
Amazon          USD Million 
 
2015 2016 2017 2018 2019 
Projected revenue $107,404.36 $129,632.04 $156,459.81 $188,839.68 $227,920.66 
Projected Cost $78,239.78 $94,431.76 $113,974.72 $137,562.16 $166,031.09 
Projected Free Cash flow $5,945.81 $18,138.88 $55,336.27 $168,814.31 $515,001.

To prepare for this Assignment, use the Netflix and Amazon Data Spreadsheet, located in this week’s Learning Resources, to generate a pro forma forecast and consider what this indicates about the...

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