Question

Due to the Covid-19 pandemic, travel and tourism are expected to be more inward and regional, rather than outward. Assume Walt Disney Co. determined to open a theme park in the Southeast Asian region. Walt Disney is now considering different financing options. Which option would you recommend the firm and why? 300-400 words

Answer 1

There are several financing options available for Walt Disney

1) Venture captial - In venture capital what happens is many large/well off investors give loans to business organisations in which they see long term growth prospects. Considering the theme park is by Disney, it will have huge growth prospects, maybe not now, but after this Covid -19 pandemic comes to a halt, the venture capitalists can be very much interested in order to give handsome finances to Disney for it's theme park

2) Bank Loan - Disney can easy get a bank loan and banks too will be very much keen as even if Disney fails to properly run the park, they have enough assets and wealth which they can give as collateral. But Disney has to keep this in mind that not only they have to return the amount taken, but also the huge amount of interest that the banks are going to charge for their loans.

3) Equity stocks- Equity is one of the methods by which a company raises it's captial by selling it's stocks to the investors. Disney has a decent share price and hence they will be able to generate enough capital. Only drawback is if the company fails to perform it could lead to the seperation of ownership and rights of the company.

Internal Source of finance - Disney is one of the biggest companies and one of the most valuable companies in the world. From movies, to many other theme parks, to various copyright, to various toys and property. They do have a lot of capital and hence they can gather funds from all of the investment projects little by little and hence can fund their theme park. In this way they won't have to pay any interest to the banks nor to the venture capitalists nor they have to worry about dissolution or seperation of property rights and in my opinion this is the best source of getting finance.