Problem:
Visit the Netflix and Blockbuster Financial Data handout to weigh the benefits of an investment with each company. Consider a scenario where you have $10 million to invest and are considering investing in Netflix or Blockbuster equity (or both). In the context of this investment scenario address the following questions:
Develop estimates of the fair market values of Netflix and Blockbuster.
What are the net present and present values of an investment in each?
Based on the payback method, which is the better investment, Netflix or Blockbuster?