The Walt Disney Company (NYSE: DIS) has debt of a par value of $58.6 billion and is currently traded at 98% of the par value. While Disney's debt is priced to yield 3%, the US Treasury rate is 2%. Disney's current stock price is $177 per share, and the company has 1.8 billion shares outstanding. Its equity beta is 1.2, and the expected return on the equity market is 6%. Disney has a 35% effective corporate tax rate.

1. The market value of Disney's debt is ____

2. The market value of Disney's equity is _____

3. Disney's cost of debt is _____

4. Disney's cost of equity is ______

5. Now, calculate Disney's weighted average cost of capital (WACC). Your calculated WACC is ______

Answer rating: 100% (QA)

Calculating Disneys Cost of Capital 1 Market Value of Debt Par value586 billion Market price98 of pa... View the full answer