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Planning New Magic At Disney

After its success domestically, the Walt Disney Company (Disney) decided to share its magic with the rest of the world. After successfully opening Tokyo Disneyland, Disney was moving around the world to create Euro Disneyland. The financing plan for Euro Disneyland included an initial public offering by the main project firm. The financing plan would change Euro Disneyland from an internally financed, privately owned project into a highly leveraged, publicly owned entity in which Disney would hold only a minority interest. This table provides financial projections for the first five years of operations.

[See the attached table]

QUESTION:
Recalculate the value for Euro Disneyland estimated at time −3 for two cases in which the assumptions are changed to the following:
a. Revenues after year 5 grow at 6% and operating expenses grow at 5%.
b. Revenues after year 5 grow at 5% and operating expenses grow at 6%.

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I have attached an Excel file with the projections made. You can follow the path of the formulae to see the origin of ...

Solution Summary

The solution examines planning a new magic at Disney. It recalculates the value for Euro Disneyland estimated at time.

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