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Problem 1: Estimate Bottom-up Beta for Disney Based on the data provided in Homework3_Problem1_Disney Bottom Up Beta.xls for Disney, calculate bottom-up beta for Disney: a) Estimate unlevered beta and unlevered beta corrected for cash for each business segment; b) Estimated unlevered beta for the firm; c) Estimate beta for the firm. Show your calculation formula, and fill out and print the table in Homework3_Problem1 Disney Bottom Up Beta.xls.
Estimate Bottom-up Beta - Disney Step 1: Estimate Unlevered Betas for Each Business Segment Unlevered Beta Number of Average CorporateUnlevered Cash Firm Corrected fo E Tax Rate Business Firns Firnis levered Beta Median D Beta Value Cash Radio and TV Broadeasting Media Networks 26.00 1.43 71.09% 40.00% 2.80% Theme Park & Entertainment Firms Movie C 0.87 1.24 20.00 4676% 27.06% 35.67% 40.00% Parks & Resorts 4.95% Studio Entertainment 10.00 Toy and Apparel Retailers Entertainment Software Consumer Products Interactive 44.00 33.00 0.74 1.03 29,53% 3.26% 25.00% 34 55% 10.64% Step 2: Estimate Unlevered Betas for the Firm Revenue in 2013 (Millions of US S) Enterprise Value Sales 3.27 3.24 3.05 0,83 1.58 Enterprise alue % of Firm Value Unlevered Beta Business Media Networks Parks & Resorts Studio Entertainment S20,356 $14,087 Interactive $1 DISI Step 3: Estimate Levered Beta for the Firm Input Firm-Specific Data Marginal Tax Rate of the firm Market Value of Equity of the firm Market Value of Debt of the firm 121,878 15,961 Beta for the Firm Source: Applied Corporate Finance, Damodaran, 4th Edition.
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