Decision-Making with Relevant Costs at Netflix

• Values:

• Cost of New Project: $1,000,000
• Expected Cash Inflows: $400,000 per year
• Project Life: 5 years
• Salvage Value: $100,000
• Requirements:

0. Calculate the net present value (NPV) of the new project for Netflix.
1. Determine the internal rate of return (IRR) for the project.
2. Discuss how relevant costs affect investment decisions at Netflix.
3. Recommend whether Netflix should undertake the new project based on NPV and IRR.