In the WACC Sensitivity tab on the accompanying spreadsheet, alter the cells

as described below to see how changes to WACC$$s inputs impact the WACC.

Write a few sentences describing each change.

$$ FED RATE INCREASE

An increase of the Federal Reserve interest rate by $200$ basis points $(2\mathrm{.}0\%)$ lifts the borrowing costs of every debt issuer. What is

Disney's adjusted WACC?

$$ 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?

$$ DEBT FOR ACQUISITION

In $2018,$ Disney announced it would acquire Twenty$-$First Centry Fox assests for $$71\mathrm{.}3$ billion. Assume Disney paid for the acqui$-$

sition in cash by raising additional debt. What is Disney's adjusted WACC?

$$ U$.$S$.$ EQUITY MARKET DOWNTURN

Equity market expectations may cool resulting in an expectation that equity markets may only expand by $200$ basis points $(2\mathrm{.}0\%)$

over the coming year. What is Disney's adjusted WACC?

$$ INCREASED MARGINAL TAX RATE

The tax rate cut has ended. A new administration is in power. Assume Disney's marginal tax rate rises to $30\mathrm{.}0\%.$ What is Disney's adjusted WACC?