Compute the weights for Disneys equity and debt based
- 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 35%, calculate its after-tax debt cost of capital.
Sep 17 2015 01:52 PM