CREDIT RATING CHANGE

A downgrade in Disney's credit rating should increase its cost of debt to the same level as Six Flags, all other conditions being equal. What is Disney's adjusted WACC?

DEBT FOR ACQUISITION

In 2018, Disney announced it would acquire Twenty-First Centry Fox assests for $71.3 billion. Assume Disney paid for the acquisition in cash by raising additional debt. What is Disney's adjusted WACC?

U.S. EQUITY MARKET DOWNTURN

Equity market expectations may cool resulting in an expectation that equity markets may only expand by 200 basis points (2.0%)over the coming year. What is Disney's adjusted WACC?

Capital Structure Components WACC Cost of Capital Components Expected Return of Risk Free Pre-Tax Market Rate Tax Rate Debt Cost Beta Bond Rating Short- Long- Equity Term Debt Term Debt Total Capital Credit Rating Change Disney Six Flags 0.96 0.89 9.6% 9.6% 2.4% 2.4% 21.8% 24.2% 3.0% 4.2% B+ B+ 248,699 4.190 21,923 1 9 36,311 2,467 306,933 6,676 8.0% 6.7% Additional Debt for Fox Acquisition Disney 0.96 Six Flags 0.89 9.6% 9.6% 2.4% 2.4% 21.8% 24.2% 3.0% 4.2% A B+ 248,699 4,190 21,923 1 9 36,311 2,467 306,933 6,676 8.0% 6.7% Bear Stock Market Disney Six Flags 0.96 0.89 9.6% 9.6% 2.4% 2.4% 21.8% 24.2% 3.0% 4.2% A B+ 248,699 4,190 21,923 192 36,311 ,467 306,933 6,676 8.0% 6.7%