I am having trouble getting the weights of debt and equity which is causing confusion for the WACC. All required figures should be in the spreadsheet.

The price for each bond issue in your spreadsheet is reported as a percentage of the bond's par value. For example, 104.50 means that the bond issue is trading at 104.5% of its par value. You can calculate the market value of each bond issue by multiplying the amount outstanding by (Price÷100).(Price÷100). Do so for each issue and then calculate the total of all the bond issues. This is the market value of Disney's debt.

Compute the weights for Disney's equity and debt based on the market value of equity and Disney's market value of debt, computed in Step 5.

Calculate Disney's cost of equity capital using the CAPM, the risk-free rate you collected in Step 1, and a market risk premium of 5%.

Assuming that Disney has a tax rate of 20%, calculate its after-tax debt cost of capital.

Calculate Disney's WACC.

Calculate Disney's net debt by subtracting its cash (collected in Step 2) from its debt. Recalculate the weights for the WACC using the market value of equity, net debt, and enterprise value. Recalculate Disney's WACC using the weights based on the net debt. How much does it change?

How confident are you of your estimate? Which implicit assumptions did you make during your data collection efforts?

(You must actually click the open button for the excel, or it won't open if you just click the title when it downloads for you)

pur-new-sol

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