Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Given the following information, please value Disney Disney current year's EBIT: 1 0 , 0 3 2 million Effective tax rate: 3 1 % Change

Given the following information, please value Disney
Disney current year's EBIT: 10,032 million
Effective tax rate: 31%
Change of working capital: 103 million
Capital Expenditures (including acquisitions)=$5,239 million
Depreciation & Amortization =$2,192 million
Beta: 1.01
Market risk premium: 5.76%
Risk free rate: 2.5%
Credit rating: AA
Credit default spread: 3%
Book value of Debt: 42,102 million
Market value of equity: 209,000 million
In the first 5 years, Disney is expected to have a high growth stage, with return on capital of 12.61% and reinvestment rate of 53.93%. Starting from year 6, Disney will become a mature firm with a stable growth rate of 2.5%. The return on capital will decline to 10%.
What is the firm value based on Free Cash Flow Model?
image text in transcribed

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Victorian Literature And Finance

Authors: Francis O'Gorman

1st Edition

0199281920, 978-0199281923

More Books

Students also viewed these Finance questions