Financing Of the Disney Project Samples †MyAssignmenthelp.com

Questions: 1.What sources of funds are there that Disney can use for the expansion? 2.What are the costs associated with getting capital for the expansion? Answers: 1.The sources of funds that Disney can use for its expansion are discussed below;- Equity Financing Equity ?nancing is the best source of fund for Disney for its expansion. In equity financing Disney will need to exchange a portion of its ownership of business for the financial investment in the business. The ownership stake resulting from an equity investment allows the investor share in the Disneys pro?ts. Equity involves a permanent investment in the company and is not repaid by the Disney at a later date Preference shares Disney can also issue preference shares for funding its expansion. Preference shares issued by Disney will have a fixed percentage ofdividendwhich is paid to the ordinary shareholders. If Disney issues ordinary shares then preference dividend will be paid only if sufficient distributable profits are available, however if Disney issues 'cumulative' preference shares then right to an unpaid dividend will be carried forward by Disney to later years. The arrears of dividend on cumulative preference shares must be paid by Disney before it pays any dividend to the ordinary shareholders.(Philips, 2014) Debentures Another source of fund available to Disney is Debenture. Debentureis a certificate of acceptance of loans which is given under the Disney's stamp and it will carry an undertaking that the debenture holder will get a fixed return (fixed on the basis of interest rates) and the principal amount whenever the debenture matures. It is issued for a long periods of time. Debentures can be freely transferrable by the debenture holder. Debenture holders will have no voting rights and the interest given to them by Disney is a charge against profit.(2014, ANZ) Bank loan Another source of fund for Disney is borrowing from Bank. Disney can borrowfrom bank on short term, medium term or long term as per its requirement. Disney will have to pay interest on such borrowing. This interest may be fixed or variable. Disney if takes a long term loan then it will be required to security or collateral for the loan.(hall, 2012) Leasing Disney can also fund its expansion by leasing. A lease is an agreement between two parties, the "lessor" and the "lessee". The lessor owns a capital asset, but allows the lessee to use it. The lessee makes payments under the terms of the lease to the lessor, for a specified period of time. Leasing is, therefore, a form of rental. Leased assets have usually been plant and machinery, cars and commercial vehicles, but might also be computers and office equipment. There are two basic forms of lease: "operating leases" and "finance leases".(Business, 2015) 2. Weighted Average Cost of Capital(WACC) is the arithmetic average (mean) capital cost, where the contribution of each capital source is weighted by the proportion of total funding it provides. WACC is usually expressed as an annual percentage. Cost of Borrowingsimply refers to the total amount paid by a debtor to secure a loan anduse funds, including financing costs,account maintenance, loan origination,and other loan-related expenses. A cost of borrowing sum will most likely be expressed in currency units such as dollars, pounds, euro, or yen. Cost of Debtis the overall average rate an organizationpays on all its debts,typically consisting primarilyof bonds and bank loans. Cost of debt is expressed as an annual percentage. Cost of Equity(COE) is a part of a company's capital structure. COEmeasuresthe returnsdemanded bystock marketinvestors who will bear the risks of ownership. COE is usually expressed as an annual percentage.(Wyka, 2014) Cost of Fundsrefers to the interest cost that financial institutions pay for the use of money, usually expressed as an annual percentage. Hence it could be said that these above sources could help the project Disney to get the required resources that it would be needed to finance the entire project of the company as a whole. The sources highlighted here consists of the major sources that are available in the case of the finance of the various projects that are being used to growth of the company and help the company to expand in the current scenario and arrange the funds without any distress.(UELAND, 2011) Bibliography 2014, A. R. (n.d.). ANZ. 1-1. Business, B. (2015). banks. 1-1. hall, A. (2012). 5 Ways of Funding A Business: How To Get Your Piece Of The Pie. Forbes , 1-2. Philips, R. (2014). Antisense Therapeutics. Answer , 1-1. UELAND, S. (2011). 13 Crowdfunding Websites to Fund Your Business. Practical Ecommerce , 1-1. Wyka, S. (2014). Biomass Project Financing Solutions in Today's Difficult Capital Markets. Biomass , 1-1.