The Netflix Corporation's cash flow from operations before interest and taxes was $5.25 milion in the year just ended, and it expects that this will grow by 6.5% per year for six years and 5.75% per year in perpetuity. To make this happen, the firm will have to invest an amount equal to 25% of pretax cash flow each year. The tax rate is 21%. Depreciation was $275,000 in the year just ended and is expected to grow at the same rate as the opening cash flow. The apropriate market capitalization rate for the unleveraged cash flow is 13.25% per year, and the firm currently has debt of $5.75 million outstanding and 4,250,000 shares outstanding. Use the free cash flow approach to calculate the price per share.
The Netflix Corporation's cash flow from operations before interest and taxes was $5.25 milion in the year just ended, and it expects that this will grow by 6.5% per year for six years and 5.75% per year in perpetuity. To make this happen, the firm will have to invest an amount equal to 25% of pretax cash flow each year. The tax rate is 21%.
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