2 fin question using excel
1. Now, assume that Disney’s current price is in equilibrium and is a constant growth stock. What is Disney’s expected constant growth rate based on your CAPM return? Use price and dividend data from #6.
2. Netflix doesn’t pay dividends at the moment. The Corporate Valuation model is the most appropriate model to value Netflix. Here’s Free Cash Flow projections (in billions of $) needed to value Netflix as a firm. Year FCF 1 8.3 2 9.1 3 10.0 4 11.0 5 12.0 After year 5, Netflix’s free cash flow is expected to grow at a 4% constant growth rate in year 5 and beyond. Netflix’s WACC is 8%. Netflix has $16.3 billion in debt (market value of debt) and 0.44 billion shares of common stock outstanding? What is your valuation of Netflix’s common stock today? Would you recommend buying Netflix’s stock today and why? Use current price in #6 to help aid your recommendation
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