Homework answers / question archive / Tokyo Disneyland and the DisneySea Park: You are assigned to work on the following case:   Tokyo Disneyland and the DisneySea Park: Corporate Governance and Differences in Capital Budgeting Concepts and Methods Between American and Japanese Companies  You are assigned to work on the following case:   Tokyo Disneyland and the DisneySea Park: Corporate Governance and Differences in Capital Budgeting Concepts and Methods Between American and Japanese Companies   This is a case about a joint venture called Tokyo DisneySea Park between Walt Disney Corp

Tokyo Disneyland and the DisneySea Park: You are assigned to work on the following case:   Tokyo Disneyland and the DisneySea Park: Corporate Governance and Differences in Capital Budgeting Concepts and Methods Between American and Japanese Companies  You are assigned to work on the following case:   Tokyo Disneyland and the DisneySea Park: Corporate Governance and Differences in Capital Budgeting Concepts and Methods Between American and Japanese Companies   This is a case about a joint venture called Tokyo DisneySea Park between Walt Disney Corp

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Tokyo Disneyland and the DisneySea Park:

You are assigned to work on the following case:

 

Tokyo Disneyland and the DisneySea Park: Corporate Governance and Differences in Capital Budgeting Concepts and Methods Between American and Japanese Companies

 You are assigned to work on the following case:

 

Tokyo Disneyland and the DisneySea Park: Corporate Governance and Differences in Capital Budgeting Concepts and Methods Between American and Japanese Companies

 

This is a case about a joint venture called Tokyo DisneySea Park between Walt Disney Corp. and Oriental Land Corp., which explores the differences in capital budgeting techniques (such as NPV) between American and Japanese methods.

 

 

Case Questions

Disney case

1) Explain the differences between the Japanese and American investment decision-making processes and the conflicts that arise from there.

2) Calculate the following values, and please show your work:

 

a) the new project valuation using the Japanese capital budgeting technique (average accounting return method)

b) the terminal value for DisneySea Park to be used for the American methods

c) NPV for the Tokyo DisneySea Park using data from Exhibit 7

d) capital budgeting using the average cash flow return (ACFR) method

3) Why do you think that OL made the major investment to undertake this project in 1997, even though the decision could not be supported by its own capital budgeting method, meaning the AAR method?