In The Wacc Sensitivity Tab On The Accompanying Spreadshee Alter The Cells As Described Below To See How Changes To Wacc 1 (54.92 KiB) Viewed 38 times
In The Wacc Sensitivity Tab On The Accompanying Spreadshee Alter The Cells As Described Below To See How Changes To Wacc 2 (49.78 KiB) Viewed 38 times
In the WACC Sensitivity tab on the accompanying spreadshee alter the cells as described below to see how changes to WACC's inputs impact the WACC. Write a few sentences describing each change. OFED RATE INCREASE An increase of the Federal Reserve interest rate by 200 basis points (2.0%) lifts the borrowing costs of every debt issuer. What is Disney's adjusted WACC? O 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? ODEBT FOR ACQUISITION In 2018, Disney announced it would acquire Twenty-First Centry Fox assests for $71.3 billion. Assume Disney paid for the acqui sition in cash by raising additional debt. What is Disney's adjusted WACC? OUS. 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? O INCREASED MARGINAL TAX RATE The tax rate cut has ended. A new administration is in power. Assume Disney's marginal tax rate rises to 30.0%. What is Disney's adjusted WACC?
Target Cost of Capital Components Beta Disney 0.96 Six Flags 089 Fed Rate Move Disney 0.96 Six Flags 089 Credit Rating Change Disney 0.96 Six Flags 0.89 Bear Stock Market Disney 0.96 Six Flags 0 89 Tax Rate Increases Disney 0.96 Six Flags 089 Expected Return of Fisk Free Markel Plate 96/ 9.67 96/ 9.67 Additional Debt for Fox Acquisition 0.96 Disney Six Flags 089 96/ 96/ 96/ 967 96/ 96/ Weighted Average Cost of Capital Scenario Changes 196/ 196/ 24/ 24/ 24/ 24/ 247 24/ 24/ 247 24/ 24/ 24/ 24/ Pre-Tax Bond Tax Rate Debt Cost Rating 218/ 24 27 218/ 24 2/ 218/ 24 27 218/ 24 22 218% 24 27 218/ 24 27 30% 42/ 30% 42/ 30/ 4.2/ 30/ 4.27 341 13.0 文化 42/ 3.0/ Ne 4.27 A B A B+ A B A B+ A B A B+ Capital Structure Components Equity 248 699 4.190 248,699 4,190 248.699 Short-Term Long-Term Total Debt Debt Capital 248 699 4.190 248.699 4,190 248 699 4.190 21.923 13 21.923 19 21.923 19 21.923 19 21.923 19 21.923 19 36.311 2.467 36,311 2.467 36,311 2467 36,311 2.467 36.311 2467 36,311 2467 306.933 6.676 306.933 6,676 WACC 306 933 6.676 306.933 6.676 7.91 6.3/ 306.933 79% 6.676 63/ 306.933 6.676 79/ 6.37 76 F 22 '79/ 631 7.9 8.32 7.3 631
Join a community of subject matter experts. Register for FREE to view solutions, replies, and use search function. Request answer by replying!