Question: 1. What is Netflixs long-run objective? How does Netflix plan to achieve its long-run objective? How would you assess Netflixs business model 2. Why does

1. What is Netflixs long-run objective? How does Netflix plan to achieve its long-run objective? How would you assess Netflixs business model 2. Why does McCarthy use a subscriber model to forecast Netflixs future cash flow requirements? What are the basic elements of a subscriber model? 3. Construct an annual subscriber model for Netflix that can be used to forecast the expected cash flows for a new subscriber over the next five years. What is the value of a new Netflix subscriber? Assume a discount rate of 20%. Should Netflix be acquiring new subscribers? 4. Assuming that Netflix does not change its current business model, what is the value of Netflix.com? What changes, if any, would you suggest be made to its existing business model? What are the value implications of these changes?

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