### What dollar amount did disney realize from sale

Assignment Help Corporate Finance
##### Reference no: EM1316520

Evaluation of Transaction and currency swaps.

In May 1988, Walt Disney Productions sold to Japanese investors a 20 year stream of projected yen royalties from Tokyo Disneyland. The present value of that stream of royalties, discounted at 6% (the return required by the Japanese investors), was ¥93 billion. Disney took the yen proceeds, converted them to dollars, and invested the dollars in bonds yielding 10%. According to Disney's CFO, "In effect, we got money at a 6% discount rate, reinvested it at 10%, and hedged our royalty stream against yen fluctuations - all in one transaction."

a. At the time of the sale, the exchange rate was 124 = \$1. What dollar amount did Disney realize from the sale of its yen proceeds?

b. Demonstrate the equivalence between Disney's transaction and a currency swap. (Hint:  a diagram would help)

c. Did Disney achieve the equivalent of a free lunch through its transaction?

#### Questions Cloud

 What is the likely number of withdrawals : A university found that 20 percent of its students withdraw without completing the introductory statistics course. 20 students registered for a section of the course this term. Utilize a test of the difference among proportions : Utilize a test of the difference among proportions when answering these questions. Illustrate the research hypothesis. Find the probability using normal distribution : Based on the model N(1152,84) describing Angus steer weights, what are the cutoff values for. Descriptive statistics for specific data : The dealership would now like some general information based on the entire sample of vehicles. Calculate and explain the following: What dollar amount did disney realize from sale : Evaluation of Transaction and currency swaps - At the time of the sale, the exchange rate was 124 = \$1. What dollar amount did Disney realize from the sale of its yen proceeds? Find the price of the material : Find the price of the material Concepts of efficiency and profit maximize : Indicate whether each of the following statements is true, false, or uncertain, and explain your answer. Determining risk as well as return of a portfolio : Determining risk as well as return of a portfolio and explain how the Selected Realized Returns Perform repeated measures anova also calculate pre : Perform Repeated Measures ANOVA also calculate PRE. An educational study uses a simple pre-post design to assess the value of a computer tutor for solving inequalities.

### Write a Review

#### Impact of the global economic crisis on business environment

This paper reviews the article of ‘the impact of the global economic crisis on the business environment' that is written by Roman & Sargu (2011).

#### Explain the short and the long-run effects on real output

Explain the short and the long-run effects on real output, price, and unemployment

#### Examine the requirements for measuring assets

Examine the needs for measuring assets at fair value in accounting standards

#### Financial analysis report driven by rigorous ratio analysis

Financial analysis report driven by rigorous ratio analysis

#### Calculate the value of the merged company

Calculate the value of the merged company, the gains (losses) to each group of shareholders, NPV of the deal under different payment methods. Synergy remains the same regardless of payment method.

#### Stock market project

Select five companies for the purpose of tracking the stock market, preparing research on the companies, and preparing company reports.

#### Write paper on financial analysis and business analysis

Write paper on financial analysis and business analysis

#### Intermediate finance

Presence of the taxes increase or decrease the value of the firm

#### Average price-earnings ratio

What is the value per share of the company's stock

#### Determine the financial consequences

Show by calculation the net present value for the three alternatives (no education, network design certification, mba). Also, according to NPV suggest which alternative you advise your friend to choose

#### Prepare a spread sheet model

Prepare a spread sheet model for the client that determines NPV/IRR with and without tax.

#### Principles and tools for financial decision-making

Principles and tools for financial decision-making. Analyse the concept of corporate capital structure and compute cost of capital.