Disney case Essay Example

Disney case Essay Example Disney case Essay Disney case Essay Executive Summary The Walt Disney company is based in Burbank, California and is a diversified international company. It is well known for its business divisions in entertainment motion picture, TV, consumer products as well as various real estate projects. In 1984, Disney and its subsidiaries posted outstanding results, as consolidated revenue increased by almost 27% to $1. 7 billion and net income increased 5% to $97. 8 million. In addition, Disney has also grown through acquisitions: assets have increased 15% to $2. 7 billion in 1984. In this case, we attempt to solve Disneys dilemma with Tokyo Disneyland. Tokyo Disneyland opened in April 1983 and Disney has been receiving pergola royalty receipts In exchange Tort use AT I TTS Dragon. I en problem Is Tanat Wendell ten royalty receipts are denominated in Yen, the Yen has been experiencing a trend of depreciation, which erodes the receipts values. Disney has begun work with Goldman to figure out the best way to hedge the exposure, as well as to acquire the cheapest cost of financing. Our analysis suggests that Disney should accept the method proposed by Goldman Cash, where it would issue an Echo-denominated bond and then enter into a currency swap. This would lower the cost of borrowing. Details of our analysis are presented in the rest of case. Introduction As indicated previously, the chief problem for Disney is how to hedge its exposure to a depreciating yen, which would decrease the value of the royalty receipts. As indicated in the case, in 1984 the spot Yen/$ rate is 248, which is almost an 8% depreciation from Just a year ago. To make matters worse, the receipts are expected to grow at 10%-20% per year over the next few years, which would further increase Disneys currency risk. There are numerous methods a company can hedge currency sis, such as through FIX forwards, futures and swaps. In particular, we will explore Goldman Cash proposed method way of entering into a foreign currency swap. This would create a Yen liability, which would allow Disney to pay out its Yen receipts and not worry about their depreciating value. Before we discuss the currency swap, lets first walk through all the options Disney has at its disposal. Disneys Options While there are many different methods of hedging, we should look into the cheapest option. We will look into methods such as 1) futures/options, 2) forwards, 3) WAP, 4) bank loan and, finally, 5) the combination of an ICE bond issuance a subsequent Acumen Swap proposed by Goldman Cash. 1) Futures/Options: FIX futures and options are the conventional methods of hedging, since they are market- priced and have high liquidity. The values of these futures and options contracts would theoretically offset gains losses of the Yen royalty receipts and thus hedge currency risk. Unfortunately, according to the case, the liquid options and futures contracts only existed for maturities of two years or less. This would not work out for Disney, which would need hedging for receipts beyond Just two years. 2) Forwards: The other method to hedge would be forwards. Forward options are not exchange- traded and are thus much less liquid. This can be observed via the Bid/Offer chart in the case, which provides rates for Yen Long-Dated FIX Forwards. The liquidity can be seen through the wide Bid-Ask offer spread, especially in longer maturities (e. G. Spot spread is 90 basis points, versus 460 basis points for 5-Year contract). Clearly, Forwards suffer the same liquidity problem as Futures/Options: only short-term trusties have acceptable rates, but Disney needs medium to long term hedges. Not to mention, FIX Forwards would be perceived by banks as risky and thus tie up Disneys credit lines, which are needed for daily operations. 3) Foreign-currency Swap (Swap Only): On the surface, this would work in Disneys favor because it can be customized to cater to Disneys needs (e. G. Longer maturity). Its also a method it has attempted before, in the previous year. Unfortunately, the swap would also only be short-term, since the current Arteriolar debt on Disneys balance sheet all mature in en to four years. Disney also believes that attractive swap rates for maturities less than four years were hard to find in the market. In addition, due to Disneys most recent Arteriolar issuance and high Debt/Equity ratio, Disney could not issue a long- term Arteriolar Dona (ten market would flew It negatively). Not to menthol, a swap would not provide additional funds to Disney, as it would only swap the interest payments. Disney was looking for additional funds to pay down some of its short- term liabilities the swap alone would not accomplish this goal. 4) Bank Loan from Japanese Bank: The other alternative would be to borrow directly from a Japanese bank at its prime rate. This would create a Yen liability, which would be paid using the royalties Disney receives from Tokyo Disneyland. This would rid Walt Disney of its Japanese receipts and hence reduce its exposure to a depreciating Yen. If Walt Disney were to pursue this option, it estimated it could borrow at a rate of 7. 50%, paid semi-annually. This option would not only hedge currency risk, but also provide funds needed to pay down Disneys short-term liabilities. 5) Goldman Cash Method ICE Debt Issuance Acumen Swap: Goldman Cash believes that while a Japanese bank loan could possibly work, an even better option would be an ICE issuance combined with an Client Swap. The ICE proceeds would be converted into dollar to pay off some short-term liabilities, and the swap would allow Disney to create a Yen liability. This would accomplish two objectives: allow Disney to hedge against a depreciating currency as well as provide funds to reduce its debt. We now evaluate this option in more detail. Cost of Funding (Before Swap) The first step in our swap analysis is to find the Quality Spread Differential (SD). Disney should only enter the swap if it provides a benefit to both sides. A positive SD would indicate that the Swap would lower the cost of funding. Our analysis indicated a positive SD of 0. 82%, as shown in Exhibit 1. Here are the details on the specific numbers: Disney (Yen): As indicated in the case, Disney has the option of getting a term loan from a Japanese bank. It can obtain a 15 billion yen 10-year bullet loan at 7. 50% and front-end fees of 0. 75%. The debt cash flow schedule can be seen in Exhibit 2. The cost of yen of 7. 753% takes into account the front-end fee. Disney ECHO): If Disney were to acquire an ICE loan, it would have a cost of 9. 473%. The cash flow schedule (which includes periodic contributions to a sinking fund) is shown in Exhibit 2. Its important to note that the bond trades at a 25 basis point premium. Also, it has a dollar expense of $75,000. These two figures are taken into account when calculating the cost. French Utility (Yen): The French Utility companys debt schedule shows all current outstanding debt. The only Yen debt it has on its balance sheet has a YET of 6. 83%. This would be its cost of debt if it were to borrow Yen. French Utility (ECHO): The same debt schedule shows two ICE bonds one issued in 1982 and the other 1985. We will use the YET of the most recently issued bond of 1985, which has a YET of 9. 37%. Quality Spread Differential As previously stated, our analysis shows a positive SD of 0. 82%, which suggests a Swap would be ideal for both parties to lower borrowing costs. Most of the differential comes from Yen financing, where the difference was 0. 92%, versus 0. 10% for ICE financing. In terms of advantage, it appears that the French Utility company has an absolute advantage when it comes to financing in both currencies. This is because it has a lower cost of financing in both currencies. Disney, on the other hand, has a comparative advantage in ICE financing, since it has less of a disadvantage at 0. 10%. Our chart suggests that Disney should borrow in ICE and the French Utility should borrow in Yen (and subsequently swap the interest payments). This will take advantage AT Don companies comparative advantage Ana lower ten overall cost AT borrowing. Cost of Funding (After Swap) Using the provided swap cash flow schedule in the case, we can calculate the swap cost of funding. The assumption is that the exchange rates are constant: $/ICE f 0. 7420 and Yen/$ of 248. Disney (Yen Swap Cost): Since Disney is borrowing in ICE but paying Yen in the swap, we must first convert the ICE proceeds into Yen (Note: This is for calculation purposes only. In real life, as indicated in the case, Disney would convert the ICE proceeds into Dollars to pay off a portion of its short-term debt). A detailed calculation can be found in Exhibit 3. Once again, its important to note that the bond trades at a 25 basis points premium, has a 2% fee and a $75,000 fee (which must be converted from dollars to yen). This gives us a net Yen amount of 14,445,057,600. Our calculation gives us a yen swap cost of 7. 010%. French Utility (ICE Swap Cost): The French Utility company would be receiving Yen from Disney while paying ECHO. To calculate the cost of paying ECHO, we need to discount the Yen payments and convert it to ICE (again, for calculation purposes only). The resulting total prevent value would be the Year O proceeds. As shown in in Exhibit 3, the Poof the Yen payments is 14. 6 billion, which converts to 79. 296 million ECHO. Using the 79. 296 as the Year O proceeds and the subsequent ICE swap interest payments, we come up with an ICE swap cost of 9. 350%. BIG Fees: To calculate the fees received by BIG for facilitating the swap, we look at the last column in Exhibit 4. To calculate the fees, we took the difference between the ICE received by Disney and the ICE paid out by the French Utility Company. Our calculation shows that BIG will receive 50 million yen from years O to 6, and then decreasing by 10 million yen every year until year 10, when it will receive 10 million yen. Comparison: No Swap vs Yes Swap We review our cost of funding in Exhibit 5. As shown in the chart, it makes sense for Disney to enter the swap, because it would reduce its cost of funding. If Disney uses a swap, it would incur a borrowing cost of 7. 10%, which is 0. 7428% lower than if Disney were to not use a Swap. On the other hand, if the French Utility company uses a swap, it would incur a borrowing cost of 9. 35%, which is 0. 0202% lower than if it were to not use the swap. Our numbers show that the swap helps Disney more than it helps the French Utility company. For Disney, a lower cost of 74 basis points is a lot higher than French Utilitys saving on 2 basis points. Bene fits Liabilities of the Swap From our model, it appears that the swap would work best for Disney. However, there are undoubtedly risks involved with our model as well as the swap. We now discuss in detail some of the risks. Exchange Rate Risk: In our model, we held the exchange rate constant for 10 years: $/ICE at 0. 7420 and Yen/Dollar at 248. However, this is clearly not realistic, as currency fluctuation is bound to occur in the 10 year period. For Disneys purposes, the best situation would be if the Yen continues to depreciate. This would mean that Disney will pay out the same nominal amount, but the value of the payment would be less. Borrowing Cost Risk: In our model, to assess he Quality Differential Spread, we looked at current market rates as indication of future borrowing rates. However, given market fluctuations (e. G. Higher Treasury yields), the borrowing rate rate could very well change by the time of the Swap. This is especially true for Disney: given its string of acquisitions and rapidly increasing Dent to Equity rattle, now would ten market perceive another Dona Issuance? WSDL investors demand higher interest rates to compensate for the risks? Conclusion Based on our analysis, we recommend that Disney should accept the method reposed by Goldman Cash.

Parts of the Body for English Learners

Parts of the Body for English Learners The words below are the most important words used when talking about all things related to the body. All of the words are categorized into different sections of the body such as the torso, head, legs, etc. Youll find example sentences for each word to help provide context for learning. There is also a list of body movement verbs including which body part completes each action.   The Body - Arms and Hands elbow - Dont jab your elbow into me. It hurts!finger - He pointed his finger at her and shouted I love you!index finger/middle/little/ring - Many people wear their marriage band on their ring finger.finger nail - Have you ever painted your finger nails?fist - Make your hand into a fist and then pound it on the table for more food.forearm - You should put some sunscreen on your exposed forearm.hand/left and right - I write with my right hand. That makes me right-handed.palm - Show me the palm of your hand, and Ill read your future.thumb - Our thumb might be the most valuable digit we have.wrist - Thats a beautiful bracelet on your wrist. The Body - Heads and Shoulders chin - He has a very strong chin. He should become an actor.cheek - She brushed her daughters cheek and sang a lullaby.ear - You need to clean out your ears! You cant hear anything.eye - Does she have blue eyes or green?eyebrow - Jennifer spends a lot of time making her eyebrows stand out.eyelash - She has very thick eyelashes.forehead - Look at that forehead. He must be a genius.hair - Susan has light brown hair and blue eyes.head - His head is rather large, isnt it?lip - Her lips are like soft pillows.mouth - Hes got a big mouth!neck - I love her long neck.nose - Shes got a beautiful petite nose.nostril - He flairs his nostrils when he is angry.jaw - You chew your food with your jaw.shoulder - Dennis had broad shoulders.tooth (teeth) - How many teeth have you lost?tongue - Stick your tongue back in your mouth!throat - The beer flowed down my throat easily on the hot day. The Body - Legs and Feet ankle - Your ankle connects your foot to your leg.calf - Her calf muscles are very strong from all the running.foot (feet) - Put your shoes on your feet and lets go.heel - As you walk down the hill, dig your heels into the dirt to help balance you.hips - I think Ive put some weight onto my hips. Im thick around the waist.knee - Your leg bends at the knee.leg - Put on your pants one leg at a time.shin - Be sure to protect your shins when you play soccer.thigh - His thighs are huge!toe - A toe is like a finger on the foot.toenail - She likes to paint her toenails pink. The Body - The Trunk or Torso bottom - Your bottom is used for sitting.chest - He has a broad chest because he swims a lot.back - Are you experiencing any pain in the back?stomach - Im eating too much and my stomach is growing!waist - She has a slim waist and will fit into anything! All Parts of the Body blood - The hospital needs more blood.bone - Our skeleton is made of bone.  hair - Its amazing how much hair is on the floor after a haircut.muscle - You should always stretch your muscles before you go running.  skin - Make sure to put on sunscreen to protect your skin.   The Body - Verbs Here is a list of verbs that are used with different parts of the body. Each verb is listed with the specific body party part which completes the action. blink  Ã‚  Ã‚  eyesglance  Ã‚  Ã‚  eyesstare  Ã‚  Ã‚  eyeswink  Ã‚  Ã‚  eyepoint  Ã‚  Ã‚  fingerscratch  Ã‚  Ã‚  fingerkick  Ã‚  Ã‚  footclap  Ã‚  Ã‚  handspunch  Ã‚  Ã‚  handsshake  Ã‚  Ã‚  handsslap  Ã‚  Ã‚  handssmack  Ã‚  Ã‚  handsnod  Ã‚  Ã‚  headshake  Ã‚  Ã‚  headkiss  Ã‚  Ã‚  lipswhistle  Ã‚  Ã‚  lips/moutheat  Ã‚  Ã‚  mouthmutter  Ã‚  Ã‚  mouthtalk  Ã‚  Ã‚  mouthtaste  Ã‚  Ã‚  mouthwhisper  Ã‚  Ã‚  mouthbreathe  Ã‚  Ã‚  mouth/nosesmell  Ã‚  Ã‚  nosesniff  Ã‚  Ã‚  noseshrug  Ã‚  Ã‚  shouldersbite  Ã‚  Ã‚  mouthchew  Ã‚  Ã‚  mouthstub  Ã‚  Ã‚  toelick  Ã‚  Ã‚  tongueswallow  Ã‚  Ã‚  throat

Antarctica

White fields of snow, surrounded by ice covered mountains and no civilization around for miles. This may sound like a fantasy land but is the blank canvas of Antarctica. Some people think of it as an arctic waste land but I see it as an unexplored frontier. Antarctica is one of last places on the planet that has not been thoroughly explored. It gives the land a kind of mystery; like anything could exist there. It represents an older simpler time in the world, before industrialization, automobiles, and roads. People have not breached this still natural and wild habitat. This natural world holds a magnificent beauty that is unparalleled anywhere else. It is one of the last uncultivated places left in the world where nature still reigns, free from the influence of human kind.Antarctica intrigues me because I am also interested in what is new and developing. This land has the opportunity to be created into anything. Any kind of government or economy; a whole new way of life could be crea ted here. Any type of society could develop from a colonial government controlled by some world power or a new sovereign nation. The unknown ignites my imagination. It makes me ask the question what new advancement in technology can be found or scientific discoveries can be made? I am intrigued by the unknown and of all the places in the world Antarctica is the epitome of the unknown.

International Business Essay Example | Topics and Well Written Essays - 3500 words

International Business - Essay Example It becomes necessary to be stated in this regard that the rapid pace of globalization with regard to the worldwide economies observed in the current years has been assessed to be greatly dependent on the facet of fast progress in the field of technologies as well as science. The reason behind this rapid progress has been ascertained to be an outcome of the related environment where the market economic structure was observed to have been expanding across the world. The stated factor of progress or development has been observed to be triggered owing to the soaring splitting up of labor across the borders which has further been infiltrating into the production chains with respect to the ventures in relation to various countries (Tisdell & Sen, 2004). The processes related to the escalating degree of globalization, otherwise as well as economic are known to give rise to the facet of fresh economic modifications along with few political challenges with respect to every individual. The com petency possessed by the national governments in terms of acting autonomously with regard to the relevant economic as well as social policies tends to trim down as a result of the escalating international economic inter-reliance. The lesser degree of proficiency of the nationalized governments with regard to controlling the social, cultural, economic and environmental alteration implies the likelihood of a rising requirement for globally synchronized political activities (Tisdell & Sen, 2004). These particular activities are considered to be imperative in order to cope up with any kind of unwanted alterations in the mentioned variables for the reason of soaring extent of globalization followed by global interdependence. Therefore, the aspect of economic globalization can be stated to be the procedure related to international industrial re-modification and restructuring (Shangquan, 2000). The Legal and Political Environment Western Australia is believed to present such a business atm osphere or setting which is considered to support development and opulence. The degree related to sovereign-risk and government policies related to pro-growth has been measured to be quite less along with an increasingly proficient as well as innovative personnel or labor force makes the aspect of conducting business in the country to be quite worthwhile and uncomplicated. The structure of the government in Australia is found to be reliant and pursuant of a tradition that is known to be liberal democratic entailing freedom in relation to speech as well as association along with religious tolerance. The structure of government in the country follows a system of three-tier that is Federal or Commonwealth, Local and State. The Parliament of Australia along with the Government holds accountability regarding the matters relevant to National Interest for instance immigration, post as well as telecommunications, social security, banks, foreign affairs, defense, pensions, census along with statistics and coinage (Government of Western Australia, 2009). The legal structure in Australia has been found to have been developed in context with the British law. Major portion in relation to the law has been

The assignment should be presented as a Journal opinion article and - 1

The should be presented as a Journal opinion article and address an economic issue of current interest to Wall Street Journal readers - Assignment Example There has been maintenance of the rate of federal rate by the Federal Reserve Bank where it has a standard short-term interest rate at near zero for over five years, even as the US economy has suffered a severe recession and slow recovery (Leubsdorf, 1). In March, there was an amendment on the Federal Reserve Bank advance direction on time that it may augment interest rates. Earlier, it had talked of 6.5 percent as had been stated in the threshold. However, it now awaits a significant time following the end of it bond-purchasing program, specifically if inflation is sustained at 2 percent. It is expected that the Federal Reserve Bank will end its bond-purchasing this year and the rates are expected to start rising next year (Leubsdorf, 1). According to the article, the rate of unemployment last month was 6.6 percent and descended from 7.5 percent last year. This information is from the Labor Department data. However, according to Mr. Rosengren, this is an underestimation of how severe the problem is. He argued that most individuals are taking part-time jobs as they cannot secure full-time employment, or have been searching for employment in the past year and have stopped in the last four weeks (Leubsdorf, 1). Inflation is below the target of the Federal Reserve Bank by 2%. Mr. Rosengren believes that it is hard to make estimates that are precise, especially because there has been a shift of economic activity since the recession, comprising the rate of household development, which is slow (Leubsdorf, 1). For the better part, the demand for goods and services is not connected to the interest rate of the market that is always stated in the newspaper, which is the nominal rate. However, it is connected to real interest rate that is as a result of subtracting the rate of inflation from the nominal interest rate. For instance, if one has a car loan

Traditional Chinese Culture Essay Example | Topics and Well Written Essays - 1000 words - 10

Traditional Chinese Culture - Essay Example The Chinese traditional distinct language is a cultural value that establishes a mutually tolerant and universally embraceable world order. Language is a communication symbol that connects the Chinese citizens with external contacts. This is because a person has to learn the traditional Chinese language in order to transact business with the locals (Zhang 9). The distinct grammatical and phonological set up of the language inspires interest among foreigners. Similarly, the unique writing style requires one to understand the sentence formation for easy communication. For instance, business interactions require the usage of a common communication model understood by all partners. The traditional Chinese language has been studied across the world because the country boasts of sophisticated industrial and technological advancements (Zhang10). As a result, this has inspired a mutually tolerant and universally embraceable world order where people from diverse backgrounds come together to l earn a common language. Religion is always a unifying element that brings together believers to embrace and accept each other. China has three main religious denominations that people profess to for spiritual nourishment and divine intervention. The Confucianism, Buddhism and Taoism have contributed to the Chinese civilization through their spiritual teachings. Buddhism is the most practiced religion in the country and spreads across other Asian nations (Zhang 15). The social and ethnic relevance of the religious associations has enabled the believers to develop their generation. It is apparent that Buddhism has had a remarkable contribution to Chinese civilization because most of the words and phrase used in the country have roots in the Buddhist origin.

Biology and Stem Cells Article Example | Topics and Well Written Essays - 750 words

Biology and Stem Cells - Article Example The embryonic stem cells (ESC) can be described as pluripotent which means that the cells can form any type of specialized cell. In addition, ESC can be considered as more widespread and ubiquitous as compared to the nonembryonic stem cells (non-ESC). The main source of ESC is the inner cell mass of blastocyst which is formed within a few days of the fertilization of egg which will develop into the fetus. The use and importance of the ESC had been recognized and thus the ESC line had been established in 1998 from an embryo. These ESC lines are created to be able to provide sources for the extraction of undifferentiated cells for application in the medical field. Aside from the extraction of ESC from embryos, there is an alternative manner of producing such cells. In the process known as the ‘nuclear transfer’ or therapeutic cloning, the nonphysiological ESC lines are produced. The nonembryonic stem cells, also referred to as non-ESC, are â€Å"multipotent† due to the restricted function in terms of differentiation and development into specialized cell types. The main sources of non-ESC are adults, specifically, the bone marrow thus referred to as the adult stem cells. The non-ESC can be classified as hemopoietic and mesenchymal stem cells. Hemopoietic stem cells can develop into the different types of blood cells. The mesenchymal stem cells are less differentiated compared to the other type. In addition to bone marrow sources, other sources are nose, muscle, liver, skin, brain, and eye (esp. retina and limbus). It is important to consider that although from adult source, stem cells are derived from comparatively less developed tissue sources.