Project Inputs

Revenue Inputs 1 2 3 4
Magic Kingdom: Dollar Revenues $ 1,000 $ 1,400 $ 1,700
MGM/Epcot $ 300
Resort Revenues as % of theme park revenues= 25%

Operating Expenses
Direct Expenses as % of revenue: Parks 60%
Direct Expenses as % of revenue: Resorts 75%

Allocated G& A Expense as % of revenue 15%

Percent of G& A : Fixed 67%

Marginal Tax Rate 36.10%

Non-cash Working capital as % of revenues = 5%

Investment at begin (B) or end (E) of year E

Capital Expenditure Inputs

Capital Expenditures already made = $500
Depreciation on investments already made = $50 $50 $50 $50
Capital Expenditures (Disneyworld) $2,000 $1,000
Capital Expenditures (MGM/Epcot) 1000 500
Maintenance Capital Expenditures as % of depreciation 0.00% 50.00% 60.00% 70.00%
Depreciation as % of BV of assets (start of year) 0.00% 12.50% 11.00% 9.50%

To infinity and beyond

Growth in revenues/ operating income after yea 2%

Page 1
 Project Inputs

5 6 7 8 9 10
$ 2,000 $ 2,200 $ 2,420 $ 2,662 $ 2,928 $ 2,987
$ 500 $ 550 $ 605 $ 666 $ 732 $ 747

$50 $50 $50 $50 $50 $50

80.00% 90.00% 100.00% 105.00% 110.00% 110%

8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00%

Page 2
 Analysis

Disney Theme Park: Analysis in US Dollars

0 1 2 3 4 5
Revenues
Magic Kingdom $0 $1,000 $1,400 $1,700 $2,000
Epcot Rio $0 $0 $0 $300 $500
Resort & Properties $0 $250 $350 $500 $625
Total $1,250 $1,750 $2,500 $3,125

Operating Expenses
Magic Kingdom $0 $600 $840 $1,020 $1,200
Epcot Rio $0 $0 $0 $180 $300
Resort & Property $0 $188 $263 $375 $469
Total $788 $1,103 $1,575 $1,969

Other Expenses
Depreciation & Amortization $50 $425 $469 $444 $372
Allocated G&A Costs $0 $188 $263 $375 $469

Operating Income -$50 -$150 -$84 $106 $315

Taxes -$18 -$54 -$30 $38 $114
Operating Income after Taxes -$32 -$96 -$54 $68 $202
+ Depreciation & Amortization $50 $425 $469 $444 $372
- Pre-project Depreciation * tax rate $18 $18 $18 $18 $18
- Capital Expenditures $2,000 $1,000 $1,188 $752 $276 $258
- Change in Working Capital $0 $0 $63 $25 $38 $31
+ Non-incremental Allocated Expense (1-t) $0 $80 $112 $160 $200
Incrementaln Cashflow to Firm -$2,000 -$1,000 -$859 -$267 $340 $466
Terminal Value of Parks
Present Value -$2,000 -$922 -$730 -$210 $246 $311

Capital Expenditures
Pre-Project investments $500 $450 $400 $350 $300 $250
Depreciation: Pre-Project $50 $50 $50 $50 $50
Magic Kingdom $2,000 $1,000 $0 $0 $0 $0
Epcot Rio $0 $0 $1,000 $500 $0 $0
Capital Maintenance $0 $188 $252 $276 $258
- Depreciation on fixed assets $0 $375 $419 $394 $322
Book Value of Fixed Assets $2,000 $3,000 $3,813 $4,145 $4,027 $3,962
Book Value of Working Capital $63 $88 $125 $156
Total Capital Invested in Project $2,500 $3,450 $4,275 $4,582 $4,452 $4,368

Average BV $2,975 $3,863 $4,429 $4,517 $4,410

Return on Capital -1.07% -2.48% -1.22% 1.50% 4.57%

Net Present Value $ 3,296

Cost of Capital 8.46%

Page 3
 Analysis

Incremental Operating Income and Cash Flow

0 1 2 3 4 5
Revenues $0 $1,250 $1,750 $2,500 $3,125
Direct Expenses $0 $788 $1,103 $1,575 $1,969
Incremental Depreciation $0 $375 $419 $394 $322
Incremental G&A $0 $63 $88 $125 $156
Incremental Operating Income $0 $25 $141 $406 $678
- Taxes $0 $9 $51 $147 $245
Incremental after-tax Operating income $0 $16 $90 $260 $433
+ Incremental Depreciation $0 $375 $419 $394 $322
- Capital Expenditures $2,000 $1,000 $1,188 $752 $276 $258
- Change in non-cash Working Capital $0 $63 $25 $38 $31
Cashflow to firm -$2,000 -$1,000 -$859 -$267 $340 $466

Page 4
 Analysis

6 7 8 9 10

$2,200 $2,420 $2,662 $2,928 $2,987

$550 $605 $666 $732 $747
$688 $756 $832 $915 $933
$3,438 $3,781 $4,159 $4,575 $4,667

$1,320 $1,452 $1,597 $1,757 $1,792

$330 $363 $399 $439 $448
$516 $567 $624 $686 $700
$2,166 $2,382 $2,620 $2,882 $2,940

$367 $364 $364 $366 $368

$516 $567 $624 $686 $700

$389 $467 $551 $641 $658

$141 $169 $199 $231 $238
$249 $299 $352 $410 $421
$367 $364 $364 $366 $368
$18 $18 $18 $18 $18
$285 $314 $330 $347 $350
$16 $17 $19 $21 $5
$220 $242 $266 $292 $298
$516 $555 $615 $681 $715
$11,275
$317 $314 $321 $328 $5,321

$200 $150 $100 $50 $0

$50 $50 $50 $50 $50
$0 $0 $0 $0 $0
$0 $0 $0 $0 $0
$285 $314 $330 $347 $350
$317 $314 $314 $316 $318
$3,931 $3,931 $3,946 $3,978 $4,010
$172 $189 $208 $229 $233
$4,302 $4,270 $4,254 $4,257 $4,243

$4,335 $4,286 $4,262 $4,255 $4,250 Average

5.74% 6.97% 8.26% 9.62% 9.90% 4.18%

Page 5
 Analysis

e and Cash Flow

6 7 8 9 10
$3,438 $3,781 $4,159 $4,575 $4,667
$2,166 $2,382 $2,620 $2,882 $2,940
$317 $314 $314 $316 $318
$172 $189 $208 $229 $233
$783 $896 $1,017 $1,148 $1,175
$283 $323 $367 $415 $424
$500 $572 $650 $734 $751
$317 $314 $314 $316 $318
$285 $314 $330 $347 $350
$16 $17 $19 $21 $5
$516 $555 $615 $681 $715

Page 6
 0 1 2 3 4 5
Incrementaln Cashflow to Fi -2000 -1000 -859.025 -267.3906 340.2183 466.33494317
Terminal Value of Parks
CF -2000 -1000 -859.025 -267.3906 340.2183 466.33494317
Discount rate (cost of capital 8.46%

PV of CF -2000 -921.9662 -730.1899 -209.5517 245.8203 310.651158526653

NPV 3296

3296

-$2,000.00 -$921.97 -$730.19 -$209.55 $245.82 $310.65

$3,295.93

Irr 16.87%
irr NPV 16.87% npv 0
1% 9728
2% 8551
3% 7492
4% 6539
5% 5679
6% 4903
7% 4202
8% 3569
9% 2996
10% 2477 NPV
11% 2007 12000
12% 1580
13% 1193 10000
14% 841
8000
15% 522
16% 231 6000
17% -33
18% -274 4000
19% -494
20% -694 2000
21% -876 0
22% -1043 0% 5% 10% 15% 20% 25%
23% -1195 -2000
24% -1334
25% -1461 -4000
26% -1577
27% -1683
28% -1780
29% -1869
30% -1950
 6 7 8 9 10
516.425 555.0753 614.9535 681.4623 714.5287
11275.32
516.425 555.0753 614.9535 681.4623 11989.85

317.1738 314.3091 321.0424 328.0023 5320.639

$317.17 $314.31 $321.04 $328.00 $5,320.64

NPV

5% 20% 25% 30% 35%

 ROC Calc

Year After-tax Operating Income

BV of pre-project investment
BV of fixed assets
BV of Working capital
BV of Capital
0 500 2000 0 $2,500
1 -$32 $450 $3,000 $0 $3,450
2 -$96 $400 $3,813 $63 $4,275
3 -$54 $350 $4,145 $88 $4,582
4 $68 $300 $4,027 $125 $4,452
5 $202 $250 $3,962 $156 $4,368
6 $249 $200 $3,931 $172 $4,302
7 $299 $150 $3,931 $189 $4,270
8 $352 $100 $3,946 $208 $4,254
9 $410 $50 $3,978 $229 $4,257
10 $421 $0 $4,010 $233 $4,243
Average

Page 9
 ROC Calc

Average BV of Capital ROC ROC

$2,975 -1.07% -1.28%

$3,863 -2.48% -2.78%
$4,429 -1.22% -1.26%
$4,517 1.50% 1.48%
$4,410 4.57% 4.53%
$4,335 5.74% 5.69%
$4,286 6.97% 6.94%
$4,262 8.26% 8.24%
$4,255 9.62% 9.63%
$4,250 9.90% 9.89%
4.18% 4.11%

Page 10
 Discount Rates

Unlevered Beta for theme park busin 0.7024

Debt to Equity Ratio for theme park 11.41%
Debt to Capital Ratio for theme park 10.24%
Tax Rate = 0.361
Levered Beta= 0.7537

Riskfree Rate = 2.75%

Mature Market Premium = 5.50%
Country Risk Premium = 3.00%
Cost of Equity ($) = 9.16%
After-tax Cost of Debt = 2.40%
Cost of Capital ($) = 8.46%

Page 11
 Revenue Summary

Year Magic Kingd Epcot II Resort PropertTotal

1 $0 $0 $0 $0
2 $1,000 $0 $250 $1,250
3 $1,400 $0 $350 $3,000
4 $1,700 $300 $500 $4,250
5 $2,000 $500 $625 $5,625
6 $2,200 $550 $688 $6,563
7 $2,420 $605 $756 $7,219
8 $2,662 $666 $832 $7,941
9 $2,928 $732 $915 $8,735
10 $2,987 $747 $933 $9,242
Beyond

Page 12
 Depr & Cap Mtn assumptions

Depreciation Capital Maintenance Expenditure/Depreciation

1 0.00% 0.00%
2 12.50% 50.00%
3 11.00% 60.00%
4 9.50% 70.00%
5 8.00% 80.00%
6 8.00% 90.00%
7 8.00% 100.00%
8 8.00% 105.00%
9 8.00% 110.00%
10 8.00% 110%

Page 13
 NPV & Duration Summary

Year Annual Cashf Terminal Val Present Value Present value *t

0 -$2,000 -$2,000 $0
1 -$1,000 -$922 -$922
2 -$859 -$730 -$1,460
3 -$267 -$210 -$629
4 $340 $246 $983
5 $466 $311 $1,553
6 $516 $317 $1,903
7 $555 $314 $2,200
8 $615 $321 $2,568
9 $681 $328 $2,952
10 $715 $11,275 $5,321 $53,206
$3,296 $62,355
18.91893724

Page 14
 Payback

YearCash Flow
Cumulated CF
PV of Cash Flow
Cumulated DCF
0 -$2,000 -$2,000 -$2,000 -$2,000
1 -$1,000 -$3,000 -$922 -$2,922
2 -$859 -$3,859 -$730 -$3,652
3 -$267 -$4,126 -$210 -$3,862
4 $340 -$3,786 $246 -$3,616
5 $466 -$3,320 $311 -$3,305
6 $516 -$2,803 $317 -$2,988
7 $555 -$2,248 $314 -$2,674
8 $615 -$1,633 $321 -$2,353
9 $681 -$952 $328 -$2,025
10 $715 -$237 $317 -$1,708
11 $729 $491 $298 -$1,409
12 $743 $1,235 $280 -$1,129
13 $758 $1,993 $264 -$865
14 $773 $2,766 $248 -$617
15 $789 $3,555 $233 -$384
16 $805 $4,360 $219 -$165
17 $821 $5,181 $206 $41
18 $837 $6,018 $194 $235
19 $854 $6,872 $182 $418
20 $871 $7,743 $172 $589

Page 15