Damodaran on Valuation_ Security Analysis for Investment and Corporate Finance ( PDFDrive )

54

Toconvertthebookvalueofdebttomarketvalue,weusethe
pretaxcostofdebtforDisneyof5.25%asthediscountrate,
$13,100millionasthebookvalueofdebt,and thecurrent
year’s interest expenses of $666 million as the coupon:

To this amount, we add the present value of Disney’s
operatingleasecommitments.Thispresentvalueiscomputed
bydiscountingtheleasecommitmenteachyearatthepretax
cost of debt for Disney (5.25%):
55

Year

Commitment

($millions)

Present Value

($millions)

1 271.00 257.48

2 242.00 218.46

3 221.00 189.55

4 208.00 169.50

5 275.00 212.92