Question
What is Disneys weighted average cost of capital (WACC)? Cost of Capital Components Capital Structure $ in Millions Beta 0.95 Equity 157,215 Expected return of
What is Disneys weighted average cost of capital (WACC)?
Cost of Capital Components | Capital Structure | $ in Millions | |
Beta | 0.95 | Equity | 157,215 |
Expected return of the market | 10.36% | Preferred equity | 0 |
Risk free rate | 3.14% | Short term debt | 5,992 |
Tax Rate | 12.02% | Long-term debt | 17,681 |
Pre-Tax cost of debt | 3.07% | Total capital | 180,888 |
3. How may Disneys WACC be impacted by stated changes in its operating environment. Consider the following scenarios:
1. an increase in the Federal Reserve reference rate;
2. a two notch downgrade in Disneys credit rating;
3. adding debt to Disneys capital structure for an acquisition;
4. a downturn in the US equity market; and,
5. an increase in Disneys marginal income tax rate?
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