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NPV Math question

Dear PrepLounge member,

I came across this math question and got stuck answering it. Anyone know how to approach this case math problem? Thank you!

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Top answer
Lorenzo
Coach
on Aug 12, 2024
IESE MBA | Bain&Co | OC&C | Private Equity | Consumer Goods

Hi, I would probably do it this way:

  1. Calculate the total profit for Y1
  2. Calculate the total profit for Y18
  3. Calculate the terminal value FCF * (1+g) / (d-g) separate for each component (# of viewers and profit/viewer) - I get a total of 40.6 Billion

I'm not sure if you need to also add the cash flows between years 1 and 18, in that case of have to convert them in Y18 and add them up to the terminal value TV.

Pedro
Coach
on Aug 12, 2024
Bain | EY-Parthenon | Former Principal | 1.5h session | 30% discount 1st session

Just please realize no one will ask this in a case interview setting. This is not a finance interview, and you are not expected to be using excel.

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