Presentation Transcript
Welcome: Welcome Jim Hunt, Executive Vice President and CFO, Walt Disney Parks and Resorts
Andy Wu, VP of Finance and Business Planning
Slide3: Spain or France Analyzing the Facts
Key Assumptions: Key Assumptions
Hotel occupancy rate: 100%
Average Income
Capital Budgeting: Capital Budgeting WACC = 9%
Cost of debt = 10%
Cost of equity = 16.5%
Capital Budgeting: Capital Budgeting NPV
Initial Investment = $470 million
IRR = 48%
Beta = 1.5
Business Risk: Business Risk NOPAT
ROIC
Standard Deviation
Business Risk: Business Risk Demand Variability
Business Risk: Business Risk Sales Price Variability
Input Cost Variability
Spanish Government
Slide13: Ability to adjust output in response to input
New Products
Cultural Differences
Foreign Risk Exposure
SWOT Analysis: SWOT Analysis Strengths
Weather
Government Aid
Price of Land
SWOT Analysis: SWOT Analysis Weaknesses
Revenues
Currency
SWOT Analysis: SWOT Analysis Threats
Terrorism
Opportunities
Government Stability
Economy
Olympics
Slide17: Support
Government
Community
Competing Attractions
Higher ROIC
Recommendations
Slide18: Questions and/or Comments
Slide19: France
Key Factors: Key Factors Initial Investment
Magic Kingdom vs. MGM
Number Of Visitors
Number of Visitors: Number of Visitors What If:
100%
75%
50%
Number of Visitors: Ticket Sales
In Park Sales
Hotel Operations Number of Visitors
Capital Budgeting : Capital Budgeting WACC: 7.75%
Cost of Debt: 9%
Cost of Equity: 14.8%
Beta Risk: 1.7
Capital Budgeting: Capital Budgeting NPV
Walt Disney
France: $2.2 billion
Spain: $1.4 billion
Euro Disney
Slide28: IRR – Walt Disney
France 51%
Spain 48% Capital Budgeting
Business Risk: Business Risk NOPAT
ROIC
Standard Deviation
Business Risk: Business Risk Foreign Risk Exposure
Demand Variability
Develop New Products
Slide32: Strengths
Tourist attraction
Name Recognition
Familiarity France Analysis
Slide35: Weaknesses
Different culture
Design duplication
France Analysis
France Analysis: France Analysis Threats
Uncertainty
Opposition
France Analysis: France Analysis Opportunities
New market
Diversity
Recommendations: Recommendations
Quantitative
NPV
IRR
Qualitative
SWOT Analysis
Slide39: Questions and/or Comments
Slide42: Conclusion What’s more important?
NPV and IRR
NOPAT and ROIC
Further consideration