Brazil Disney project

USA Government Bond Rates: 4.23%

Disney Beta: 1,30

Market rate 12%

Brazil 10-year Bond Yield: 10.8%

Sovereign spread= 2.47%

project spread

Summary of AES approach to the WACC Calculation Step 1Calculate Cost of Equity Using CAPM (Risk free rate Beta (Market Rate of S&P 500-Risk Free Rate) Sovereign Spread (Difference in Government Bond Rates using the Sovereign Spread lumps together macro risks.)

Step 2Calculate Cost of Debt Risk Free Rate plus Project Spread (use Project's theoretical Bond Rating based on Interest Coverage Ratio) plus Sovereign Spread, All of this times (1-the corporate tax rate).

Step 3: Apply Appropriate Capital Structures based on risk of project: the more risk the more equity we want in our capital structure to get an unadjusted WACC Step

4: Apply micro (Idiosyncratic) risk factors in some logical waySee Venerus/ AES methodology or use CLEAR premiums in the article to get a additional Non diversifiable premium to get an adjusted WACC