Aswath Damodaran 373
Summarizing for Disney
Approach Used Optimal
1 a. Cost of Capital unconstrained 30 %
1 b. Cost of Capital w/ lower EBIT 20 %
1 c. Cost of Capital w/ Rating constraint 20 %
II. APV Approach 30 %
IIIa. Entertainment Sector Regression 25. 55 %
IIIb. Market Regression 32. 57 %
IV. Life Cycle Approach Mature Growth
Actual Debt Ratio 21 %
Disney is slightly under levered. What would you do if you go a split verdict -
under levered using cost of capital but over levered using the sector comparison?
