Disney is currently trading at $1375 per share. It has 1.81 billion shares outstanding, and has a beta of 1.08. Disney. Disney has $68.31 billion worth bonds outstanding in market values. The last class of bonds that Disney issued had a coupon rate of 6% (coupon payments are paid semi-annual), and have a 1,000 face value. The bonds currently have 27 years left to maturity and are currently trading at 1045.70. Disney does not have any preferred stock outstanding. The expected market risk premium is 7%, and the current Treasury bill rate is 2.15%. Disney has a tax rate of 21%.

1. Given the above information, what is Disneys WACC?
3. Disneys last year dividend was $1.76. The dividend has been growing by 5% each year and expected to continue to do so forever. What is Disneys WACC if you use the average of CAPM and the DCF (dividends) for Disneys cost of equity.
4. Disney has the following coefficients on the Fama-French 3 factor model: b: 1.04, s:-1.2, h: 1.08

The market risk premium is 4.90%, the size (SMB) risk premium is 3.25%, and the value premium (HML) is 3.80%. What is estimated cost of equity using the 3-factor model? What will Disneys WACC be if only this estimated cost of equity is used? 5pts

4. Disney is thinking about opening up its own line of fast-food restaurants. To estimate the cost of equity, Disney is using the following Firms information to get an estimated cost of equity:

Company Name	Beta	Debt to equity Ratio	Debt Beta
McDonalds	.68	.26	.10
Jack in the Box	1.68	.58	.30
Yum Brands	0.86	.45	.20
Wendys	1.11	.30	.25

Estimate the average unlevered equity beta for the group of comparison. Then, re-lever the beta to get an estimate for Disneys fast food levered beta (using Disneys current capital structure (D/E), and the associated cost of equity using the CAPM model and the assumptions in problem 2. Assume Debt beta of .20. What is Disneys WACC if this estimated cost of equity is used?