8/10/2019 Net Flix Case Study FInal Solution by Senior Students

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First Month Cost Per DVD 17.55Monthly Shipping 4.3 DVD Per Subscriber 5.6Initail Shipping 4Total Shipping Cost 8.3 Total Cost 98.28

Over All Cost 106.58Discount Rate 20%

Subscriber 120000

1 2One month leave 70% -106.58 78.624Six Months Leaves 42% -106.58 5.872Stay 28% -106.58 5.872Expected Value -149.212 59.1472Each Month PVs -124.343 41.074Pvs Based Of YearsYear 1 -64.8325Year 2 7.298783Year 3 7.298783Year 4 7.298783Year 5 9.583476NPV -33.3527

Operating Cost 1 2Assumptions %Subscriber Growth 4% 4%

Stock Based Compensation 0 0Sales and Marketing 1% 1%Administrative 2% 2%Product Development 3% 3%

Revenue ` 1 2Old Subscriber $84,000 $87,500New Subscriber $3,500 $3,646Total Subscriber $87,500 $91,146

Cost Per DVD For New Subscriber 17.55 17.55New Subscriber $3,500 $3,646Total $61,425 63984.375

Cost Per DVD For Old and Regular Subscriber 19.55 19.55Old and Regular Subscriber $84,000 $87,500Total $1,642,200 $1,710,625Revenue $1,703,625 $1,774,609

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3 4 5 6 7 8 9 10

5.872 5.872 5.872 5.872 78.6245.872 5.872 5.872 5.872 5.872 5.872 5.872 5.872

4.1104 4.1104 4.1104 4.1104 34.66624 1.64416 1.64416 1.644162.3787037 1.9822531 1.6518776 1.37656464 9.67471136 0.38237907 0.31864922 0.26554102

3 4 5 6 7 8 9 10

4% 4% 4% 4% 4% 4% 4% 4%

0 0 0 0 0 0 0 01% 1% 1% 1% 1% 1% 1% 1%2% 2% 2% 2% 2% 2% 2% 2%3% 3% 3% 3% 3% 3% 3% 3%

3 4 5 6 7 8 9 10$91,146 $94,944 $98,900 $103,020 $107,313 $111,784 $116,442 $121,294

$3,798 $3,956 $4,121 $4,293 $4,471 $4,658 $4,852 $5,054$94,944 $98,900 $103,020 $107,313 $111,784 $116,442 $121,294 $126,348

17.55 17.55 17.55 17.55 17.55 17.55 17.55 17.55$3,798 $3,956 $4,121 $4,293 $4,471 $4,658 $4,852 $5,054

66650.391 69427.49 72320.302 75333.6483 78472.5503 81742.2399 85148.1665 88696.0068

19.55 19.55 19.55 19.55 19.55 19.55 19.55 19.55$91,146 $94,944 $98,900 $103,020 $107,313 $111,784 $116,442 $121,294

$1,781,901 $1,856,147 $1,933,486 $2,014,048 $2,097,967 $2,185,382 $2,276,440 $2,371,292$1,848,551 $1,925,574 $2,005,807 $2,089,382 $2,176,440 $2,267,125 $2,361,588 $2,459,988

Year 1

8/10/2019 Net Flix Case Study FInal Solution by Senior Students

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11 12 1 2 3 4 5 6

5.872 5.872 5.872 5.872 5.872 5.872 5.872 5.8721.64416 1.64416 1.64416 1.64416 1.64416 1.64416 1.64416 1.64416

0.22128418 0.18440349 1.37013333 1.14177778 0.95148148 0.79290123 0.66075103 0.55062586

11 12 1 2 3 4 5 6

4% 4% 4% 4% 4% 4% 4% 4%

0 0 0 0 0 0 0 01% 1% 1% 1% 1% 1% 1% 1%2% 2% 2% 2% 2% 2% 2% 2%3% 3% 3% 3% 3% 3% 3% 3%

11 12 1 2 3 4 5 6$126,348 $131,612 $137,096 $142,808 $148,759 $154,957 $161,413 $168,139

$5,264 $5,484 $5,712 $5,950 $6,198 $6,457 $6,726 $7,006$131,612 $137,096 $142,808 $148,759 $154,957 $161,413 $168,139 $175,145

17.55 17.55 17.55 17.55 17.55 17.55 17.55 17.55$5,264 $5,484 $5,712 $5,950 $6,198 $6,457 $6,726 $7,006

92391.6737 96241.3268 100251.382 104428.523 108779.711 113312.199 118033.541 122951.605

19.55 19.55 19.55 19.55 19.55 19.55 19.55 19.55$126,348 $131,612 $137,096 $142,808 $148,759 $154,957 $161,413 $168,139

$2,470,095 $2,573,016 $2,680,225 $2,791,901 $2,908,230 $3,029,406 $3,155,632 $3,287,116$2,562,487 $2,669,257 $2,780,476 $2,896,330 $3,017,010 $3,142,719 $3,273,665 $3,410,068

Year 2

8/10/2019 Net Flix Case Study FInal Solution by Senior Students

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$565,932 $589,512 $614,075 $639,662 $666,314 $694,078 $722,997 $753,122

$1,996,555 $2,079,745 $2,166,401 $2,256,668 $2,350,695 $2,448,641 $2,550,668 $2,656,946

2532 2532 2532 2532 2532 2532 2532 25327303 7376 7450 7524 7600 7676 7752 7830

$741.05 $755.87 $770.99 $786.41 $802.14 $818.18 $834.54 $851.23

1252 1252 1252 1252 1252 1252 1252 125211828 11916 12005 12095 12186 12278 12371 12465

$1,984,727 $2,067,829 $2,154,396 $2,244,573 $2,338,510 $2,436,364 $2,538,297 $2,644,481

11 12 1 2 3 4 5 6$1,984,727 $2,067,829 $2,154,396 $2,244,573 $2,338,510 $2,436,364 $2,538,297 $2,644,481

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7 8 9 10 11 12 1 2

5.872 5.872 5.872 5.872 5.872 5.872 5.872 5.8721.64416 1.64416 1.64416 1.64416 1.64416 1.64416 1.64416 1.64416

0.45885488 0.38237907 0.31864922 0.26554102 0.22128418 0.18440349 1.37013333 1.14177778

7 8 9 10 11 12 1 2

4% 4% 4% 4% 4% 4% 4% 4%

0 0 0 0 0 0 0 01% 1% 1% 1% 1% 1% 1% 1%2% 2% 2% 2% 2% 2% 2% 2%3% 3% 3% 3% 3% 3% 3% 3%

7 8 9 10 11 12 1 2$175,145 $182,442 $190,044 $197,963 $206,211 $214,803 $223,753 $233,076

$7,298 $7,602 $7,919 $8,248 $8,592 $8,950 $9,323 $9,712$182,442 $190,044 $197,963 $206,211 $214,803 $223,753 $233,076 $242,788

17.55 17.55 17.55 17.55 17.55 17.55 17.55 17.55$7,298 $7,602 $7,919 $8,248 $8,592 $8,950 $9,323 $9,712

128074.589 133411.03 138969.823 144760.232 150791.909 157074.905 163619.693 170437.18

19.55 19.55 19.55 19.55 19.55 19.55 19.55 19.55$175,145 $182,442 $190,044 $197,963 $206,211 $214,803 $223,753 $233,076

$3,424,080 $3,566,750 $3,715,364 $3,870,171 $4,031,428 $4,199,404 $4,374,379 $4,556,645$3,552,154 $3,700,161 $3,854,334 $4,014,931 $4,182,220 $4,356,479 $4,537,999 $4,727,082

8/10/2019 Net Flix Case Study FInal Solution by Senior Students

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8/10/2019 Net Flix Case Study FInal Solution by Senior Students

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3 4 5 6 7 8 9 10

5.872 5.872 5.872 5.872 5.872 5.872 5.872 5.8721.64416 1.64416 1.64416 1.64416 1.64416 1.64416 1.64416 1.64416

0.95148148 0.79290123 0.66075103 0.55062586 0.45885488 0.38237907 0.31864922 0.26554102

3 4 5 6 7 8 9 10

4% 4% 4% 4% 4% 4% 4% 4%

0 0 0 0 0 0 0 01% 1% 1% 1% 1% 1% 1% 1%2% 2% 2% 2% 2% 2% 2% 2%3% 3% 3% 3% 3% 3% 3% 3%

3 4 5 6 7 8 9 10$242,788 $252,904 $263,442 $274,419 $285,853 $297,763 $310,170 $323,094

$10,116 $10,538 $10,977 $11,434 $11,911 $12,407 $12,924 $13,462$252,904 $263,442 $274,419 $285,853 $297,763 $310,170 $323,094 $336,556

17.55 17.55 17.55 17.55 17.55 17.55 17.55 17.55$10,116 $10,538 $10,977 $11,434 $11,911 $12,407 $12,924 $13,462

177538.729 184936.176 192641.85 200668.594 209029.785 217739.359 226811.833 236262.326

19.55 19.55 19.55 19.55 19.55 19.55 19.55 19.55$242,788 $252,904 $263,442 $274,419 $285,853 $297,763 $310,170 $323,094

$4,746,506 $4,944,277 $5,150,288 $5,364,883 $5,588,420 $5,821,271 $6,063,824 $6,316,483$4,924,044 $5,129,213 $5,342,930 $5,565,552 $5,797,450 $6,039,010 $6,290,636 $6,552,746

Year 3

8/10/2019 Net Flix Case Study FInal Solution by Senior Students

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$1,087,488 $1,132,800 $1,180,000 $1,229,167 $1,280,382 $1,333,731 $1,389,303 $1,447,191

$3,836,556 $3,996,413 $4,162,930 $4,336,385 $4,517,068 $4,705,279 $4,901,333 $5,105,555

2532 2532 2532 2532 2532 2532 2532 25328564 8649 8736 8823 8911 9000 9090 9181

$1,017.30 $1,037.65 $1,058.40 $1,079.57 $1,101.16 $1,123.19 $1,145.65 $1,168.56

1252 1252 1252 1252 1252 1252 1252 125213365 13470 13578 13686 13796 13907 14020 14133

$3,823,192 $3,982,942 $4,149,352 $4,322,699 $4,503,272 $4,691,372 $4,887,313 $5,091,421

3 4 5 6 7 8 9 10$3,823,192 $3,982,942 $4,149,352 $4,322,699 $4,503,272 $4,691,372 $4,887,313 $5,091,421

8/10/2019 Net Flix Case Study FInal Solution by Senior Students

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11 12 1 2 3 4

5.872 5.872 5.872 5.872 5.872 5.8721.64416 1.64416 1.64416 1.64416 1.64416 1.64416

0.22128418 0.18440349 1.37013333 1.14177778 0.951481481 0.792901235

11 12 1 2 3 4

4% 4% 4% 4% 4% 4%

0 0 0 0 0 01% 1% 1% 1% 1% 1%2% 2% 2% 2% 2% 2%3% 3% 3% 3% 3% 3%

11 12 1 2 3 4$336,556 $350,579 $365,187 $380,403 $396,253 $412,763

$14,023 $14,607 $15,216 $15,850 $16,511 $17,198$350,579 $365,187 $380,403 $396,253 $412,763 $429,962

17.55 17.55 17.55 17.55 17.55 17.55$14,023 $14,607 $15,216 $15,850 $16,511 $17,198

246106.589 256361.031 267042.74 278169.521 289759.9177 301833.2476

19.55 19.55 19.55 19.55 19.55 19.55$336,556 $350,579 $365,187 $380,403 $396,253 $412,763

$6,579,670 $6,853,823 $7,139,399 $7,436,874 $7,746,744 $8,069,525$6,825,777 $7,110,184 $7,406,442 $7,715,044 $8,036,504 $8,371,358

8/10/2019 Net Flix Case Study FInal Solution by Senior Students

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$1,507,491 $1,570,303 $1,635,732 $1,703,887 $1,774,883 $1,848,836

$5,318,286 $5,539,882 $5,770,710 $6,011,156 $6,261,621 $6,522,522

2532 2532 2532 2532 2532 25329273 9366 9459 9554 9650 9746

$1,191.93 $1,215.77 $1,240.09 $1,264.89 $1,290.19 $1,315.99

1252 1252 1252 1252 1252 125214249 14365 14483 14603 14723 14846

$5,304,038 $5,525,516 $5,756,227 $5,996,554 $6,246,898 $6,507,676

11 12 1 2 3 4$5,304,038 $5,525,516 $5,756,227 $5,996,554 $6,246,898 $6,507,676

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5 6 7 8 9

5.872 5.872 5.872 5.872 5.8721.64416 1.64416 1.64416 1.64416 1.64416

0.660751029 0.550625857 0.458854881 0.382379068 0.318649223

5 6 7 8 9

4% 4% 4% 4% 4%

0 0 0 0 01% 1% 1% 1% 1%2% 2% 2% 2% 2%3% 3% 3% 3% 3%

5 6 7 8 9$429,962 $447,877 $466,539 $485,978 $506,227

$17,915 $18,662 $19,439 $20,249 $21,093$447,877 $466,539 $485,978 $506,227 $527,319

17.55 17.55 17.55 17.55 17.55$17,915 $18,662 $19,439 $20,249 $21,093

314409.6329 327510.0343 341156.2857 355371.131 370178.2614

19.55 19.55 19.55 19.55 19.55$429,962 $447,877 $466,539 $485,978 $506,227

$8,405,755 $8,755,995 $9,120,828 $9,500,862 $9,896,732$8,720,165 $9,083,505 $9,461,984 $9,856,234 $10,266,910

Year 4

8/10/2019 Net Flix Case Study FInal Solution by Senior Students

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$1,925,871 $2,006,116 $2,089,704 $2,176,775 $2,267,474

$6,794,294 $7,077,389 $7,372,280 $7,679,459 $7,999,436

2532 2532 2532 2532 25329844 9942 10041 10142 10243

$1,342.31 $1,369.16 $1,396.54 $1,424.47 $1,452.96

1252 1252 1252 1252 125214970 15095 15222 15350 15480

$6,779,324 $7,062,294 $7,357,059 $7,664,109 $7,983,956

5 6 7 8 9$6,779,324 $7,062,294 $7,357,059 $7,664,109 $7,983,956

8/10/2019 Net Flix Case Study FInal Solution by Senior Students

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10 11 12 1 2

5.872 5.872 5.872 5.872 5.8721.64416 1.64416 1.64416 1.64416 1.64416

0.265541019 0.221284183 0.184403486 1.370133333 1.141777778

10 11 12 1 2

4% 4% 4% 4% 4%

0 0 0 0 01% 1% 1% 1% 1%2% 2% 2% 2% 2%3% 3% 3% 3% 3%

10 11 12 1 2$527,319 $549,291 $572,178 $596,019 $620,853

$21,972 $22,887 $23,841 $24,834 $25,869$549,291 $572,178 $596,019 $620,853 $646,722

17.55 17.55 17.55 17.55 17.55$21,972 $22,887 $23,841 $24,834 $25,869

385602.3557 401669.1205 418405.3338 435838.8894 453998.8431

19.55 19.55 19.55 19.55 19.55$527,319 $549,291 $572,178 $596,019 $620,853

$10,309,095 $10,738,641 $11,186,084 $11,652,171 $12,137,678$10,694,698 $11,140,310 $11,604,490 $12,088,010 $12,591,677

8/10/2019 Net Flix Case Study FInal Solution by Senior Students

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$2,361,952 $2,460,366 $2,562,882 $2,669,668 $2,780,905

$8,332,746 $8,679,944 $9,041,608 $9,418,342 $9,810,773

2532 2532 2532 2532 253210346 10449 10554 10659 10766

$1,482.02 $1,511.66 $1,541.89 $1,572.73 $1,604.19

1252 1252 1252 1252 125215611 15744 15879 16016 16154

$8,317,135 $8,664,199 $9,025,729 $9,402,326 $9,794,619

10 11 12 1 2$8,317,135 $8,664,199 $9,025,729 $9,402,326 $9,794,619

8/10/2019 Net Flix Case Study FInal Solution by Senior Students

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3 4 5 6 7

5.872 5.872 5.872 5.872 5.8721.64416 1.64416 1.64416 1.64416 1.64416

0.951481481 0.792901235 0.660751029 0.550625857 0.458854881

3 4 5 6 7

4% 4% 4% 4% 4%

0 0 0 0 01% 1% 1% 1% 1%2% 2% 2% 2% 2%3% 3% 3% 3% 3%

3 4 5 6 7$646,722 $673,669 $701,738 $730,977 $761,435

$26,947 $28,070 $29,239 $30,457 $31,726$673,669 $701,738 $730,977 $761,435 $793,161

17.55 17.55 17.55 17.55 17.55$26,947 $28,070 $29,239 $30,457 $31,726

472915.4616 492620.2725 513146.1172 534527.2054 556799.1723

19.55 19.55 19.55 19.55 19.55$646,722 $673,669 $701,738 $730,977 $761,435

$12,643,415 $13,170,224 $13,718,983 $14,290,608 $14,886,050$13,116,331 $13,662,844 $14,232,129 $14,825,135 $15,442,849

Year 5

8/10/2019 Net Flix Case Study FInal Solution by Senior Students

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$2,896,776 $3,017,475 $3,143,203 $3,274,169 $3,410,593

$10,219,555 $10,645,370 $11,088,927 $11,550,965 $12,032,256

2532 2532 2532 2532 253210873 10982 11092 11203 11315

$1,636.27 $1,669.00 $1,702.38 $1,736.42 $1,771.15

1252 1252 1252 1252 125216293 16435 16578 16723 16870

$10,203,262 $10,628,935 $11,072,349 $11,534,242 $12,015,386

3 4 5 6 7$10,203,262 $10,628,935 $11,072,349 $11,534,242 $12,015,386

8/10/2019 Net Flix Case Study FInal Solution by Senior Students

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8 9 10 11 12

5.872 5.872 5.872 5.872 78.6241.64416 1.64416 1.64416 1.64416 22.01472

0.382379068 0.318649223 0.265541019 0.221284183 2.469097351

8 9 10 11 12

4% 4% 4% 4% 4%

0 0 0 0 01% 1% 1% 1% 1%2% 2% 2% 2% 2%3% 3% 3% 3% 3%

8 9 10 11 12$793,161 $826,210 $860,635 $896,495 $933,849

$33,048 $34,425 $35,860 $37,354 $38,910$826,210 $860,635 $896,495 $933,849 $972,759

17.55 17.55 17.55 17.55 17.55$33,048 $34,425 $35,860 $37,354 $38,910

579999.1378 604165.7686 629339.3423 655561.8148 682876.8905

19.55 19.55 19.55 19.55 19.55$793,161 $826,210 $860,635 $896,495 $933,849

$15,506,302 $16,152,398 $16,825,414 $17,526,473 $18,256,743$16,086,301 $16,756,563 $17,454,754 $18,182,035 $18,939,620

8/10/2019 Net Flix Case Study FInal Solution by Senior Students

20/21

$3,552,701 $3,700,730 $3,854,928 $4,015,550 $4,182,864

$12,533,600 $13,055,833 $13,599,826 $14,166,485 $14,756,756

2532 2532 2532 2532 253211428 11542 11658 11774 11892

$1,806.57 $1,842.71 $1,879.56 $1,917.15 $1,955.49

1252 1252 1252 1252 125217018 17169 17321 17475 17631

$12,516,581 $13,038,664 $13,582,505 $14,149,010 $14,739,124

8 9 10 11 12$12,516,581 $13,038,664 $13,582,505 $14,149,010 $14,739,124

8/10/2019 Net Flix Case Study FInal Solution by Senior Students

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Depreciation 8695