Aswath Damodaran 139
Disney : Beta and Leverage
Debt to Capital Debt/Equity Ratio Beta Effect of Leverage
0. 00 % 0. 00 % 0. 86 0. 00
10. 00 % 11. 11 % 0. 92 0. 06
20. 00 % 25. 00 % 1. 00 0. 14
30. 00 % 42. 86 % 1. 09 0. 23
40. 00 % 66. 67 % 1. 22 0. 36
50. 00 % 100. 00 % 1. 40 0. 54
60. 00 % 150. 00 % 1. 67 0. 81
70. 00 % 233. 33 % 2. 12 1. 26
80. 00 % 400. 00 % 3. 02 2. 16
90. 00 % 900. 00 % 5. 72 4. 86
Since equity investors bear all of the non-diversifiable risk, the beta of Disney’s
equity will increase as the leverage increases.
