Walt Disney

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Data Case

You work in Walt Disney Company’s corporate finance and treasury department and have just been assigned to the team estimating Disney’s WACC. You must estimate this WACC in preparation for a team meeting later today. You quickly realize that the information you need is readily available online.

* 1. Go to http://finance.yahoo.com. Under the “Investing Tab” and then “Market Overview,” you will find the yield to maturity for ten-year Treasury bonds listed as “10 Yr Bond(%).” Collect this number as your risk-free rate.

* 2. In the box next to the “Get Quotes” button, type Walt Disney’s ticker symbol (DIS) and press enter. Once you see the basic information for Disney, find and click “Key Statistics” on the left side of the screen. From the key statistics, collect Disney’s market capitalization (its market value of equity), enterprise value (market-value equity + net debt), cash, and beta.

* 3. To get Disney’s cost of debt and the market value of its long-term debt, you will need the price and yield to maturity on the firm’s existing long-term bonds. Go tohttp://cxa.marketwatch.com/finra/BondCenter/Default.aspx. Under “Quick Bond Search,” click “Corporate” and type Disney’s ticker symbol. A list of Disney’s outstanding bond issues will appear. Assume that 431432Disney’s policy is to use the expected return on noncallable ten-year obligations as its cost of debt. Find the noncallable bond issue that is at least 10 years from maturity. (Hint: You will see a column titled “Callable”; make sure the issue you choose has “No” in this column. Bonds may appear on multiple pages.) Find the credit rating and yield to maturity for your chosen bond issue (it is in the column titled “Yield”). Hold the mouse over the table of Disney’s bonds and right-click. Select “Export to Microsoft Excel.” (Note that this option is available in IE, but may not be in other...