The Walt Disney company’s intrinsic value for 2018 using thediscount valuation techniques

Calculate the Intrinsic Value of The Walt Disney Company:

You will use the Discounted Cash Flow (DCF) valuation model tocalculate the intrinsic value of the Walt Disney company. Thismodel involves three primary steps: i) calculating the company'scost of capital, ii) calculating the free cash flows to the firm,and ii) applying the time-value-of-money concept to discount yourprojected cash flow values back to the present using the company'scost of capital as the discount rate.

Calculating the Cost of Capital:

The company's cost of capital can be calculated using theWeighted Average Cost of Capital (WACC) formula:

WACC = D/V * eD *(1-Tc) + E/V * rE

Using the website, ThatsWACC (www.thatswacc.com), enter yourcompany's \"ticker symbol\", identify the relevant terms from aboveand calculate the WACC (please show your calculations).

Calculating Free Cash Flow to the Firm:

Estimate the free cash flows available to the firm (\"FCFF\"). Todo this we can use the below formula:

FCFF = Cash Flow from Operations - Capital Expenditures +Interest * (1 - Tax Rate)

The Cash Flow from Operations and Capital Expenditures can befound on the Statement of Cash Flows in Yahoo! Finance.

The Interest expense (if any exists) is on the IncomeStatement.

The Tax Rate is the one you used to calculate the WACC,above.

For additional details on these calculations please refer tothis external resource.

Calculating Firm Value:

You can now combine the two items above to estimate a presentvalue of the firm. To simplify this calculation you should assume aconstant growth rate of 3% in the Free Cash Flows to the Firm andapply the constant growth model:

Firm Value = FCFF * (1+g) / (WACC - g)