Submitted by: Submitted by NutZack41
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Words: 2487
Pages: 10
Category: Business and Industry
Date Submitted: 05/17/2016 01:04 PM
The Walt Disney Company
DIS
The Walt Disney Company
DIS
A cost of capital analysis and corporate valuation
A cost of capital analysis and corporate valuation
Table of Contents
Cost of Capital | | | | | 2 | - | 4 |
| Beta | | | | | 2 | - | 2 |
| Risk Free Rate | | | | | 2 | - | 2 |
| Market Risk Premium | | | | | 2 | - | 2 |
| Cost of Equity | | | | | 2 | - | 2 |
| Constant Dividend Growth Rate | | | | | 2 | - | 3 |
| Dividend Yield | | | | | 2 | - | 3 |
| Market Value of Debt | | | | | 3 | - | 3 |
| Weighted Average Yield to Maturity | | | | | 3 | - | 3 |
| After-Tax Cost of Debt | | | | | 3 | - | 3 |
| Market Value of Equity | | | | | 3 | - | 3 |
| Weighted Average Cost of Capital | | | | | 3 | - | 3 |
| | | | | | | | |
Corporate Valuation | | | | | 4 | - | 5 |
| Free Cash Flow | | | | | 4 | - | 4 |
| Constant Growth Rate | | | | | 4 | - | 4 |
| Terminal Value | | | | | 4 | - | 4 |
| Total Value | | | | | 4 | - | 4 |
| Value of Equity | | | | | 4 | - | 4 |
| Intrinsic Value / Share | | | | | 4 | - | 4 |
| Market Value Added | | | | | 5 | - | 5 |
| | | | | | | | |
Summary | | | | | 5 | - | 5 |
| | | | | | | | |
Appendix | | | | | 6 | - | 8 |
Cost of Capital
Beta: 1.3135
The beta above, for The Walt Disney Company, is comprised of an average of the betas collected from the following: Yahoo Finance, Google Finance, and Value Line. The beta represents a stock’s volatility and how closely its price moves in accordance to the market; a beta of one represents the market. Disney’s beta of 1.3135 shows that the stock moves fairly close to the way the market moves meaning.
Risk Free Rate: 2.12%
Market Risk Premium: 12.5%
Cost of Equity: 15.75%
Disney’s cost of equity was calculated using the capital...