PS/EBIT AND Projected Statements for Walt Disney
Lets say Walt Disney needs to raise $1billion to revamp its California Adventure theme park. Determine whether Walt Disney should have used all debt, all stock, or a 50-50 combination of debt and stock to finance this market-devlopment strategy. Assume a 38% tax rate, 5% interest rate. Walt Disney stock price of $30 per share, and an annual dividend of 0.30 per share of common stock. The EBIT range for 2008 is between $7.725 billion and $10billion. A total of 2billion shares of common stock are outstanding. Develop an EPS/EBIT chart to reflect your analysis.
2.Develop a 2008 projected income statement and balance sheet for Walt Disney. Assume that Walt Disney plans to raise $900 Mio in 2008 to being serving new countries and plans to obtain 50% financing from a bank and 50% financing from a stock issuance. Make other assumptions and state them clearly in written form.
Compute Walt Disney current ratio, debt-to-equity ratio, and ROI ratio for 2006 and 2007. How do your 2008 projected ratios compare to the 2006 and 2007 ratio? Why is it important to make this comparison? Use http://finance.yahoo.com to obtain 2007 financial statements.