Marriott Corporation – Wacc Analysis and Estimation Marriott CorporationWACC Analysis and Estimation26th November 2015Team MembersExecutive Summary[pic 1]J. Willard Marriott founded Marriott Corp in 1927 with a root beer stand, later growing it into a leading lodging and food service company with sales of over $6.5bn by 1987. It has three main divisions: lodging (41% of Sales), contract.
Marriott Corporation Case Statement of Problem:Marriott is faced with the issue of deciding what Hurdle rate to use. If they choose a hurdle rate that is too high, then they will forego NPV-positive projects. If they choose a hurdle rate that is too low, they will be taking on potentially negative NPV projects.There is added.
Marriott Case 1. To solve for Marriott’s WACC, we need to know the cost of equity, cost of debt, and its debt to equity ratio. By dividing the tax 175.9 by income before income tax 398.9(Exhibit 1), we get a corporate income tax rate 44.1%, and we will use 44.1% as tax rate in our.
Marriot Case – Speaker Notes Speaker notes Theoretically say it is appropriate to calculate the cost of capital for each division separately We Need to estimate all WACC parameters for each division on a standalone basis: what measure of risk free rate is appropriate what leverage is sustainable and what cost of debt is realistic.
Marriott Corporation 2. What is the weighted average cost of capital for Marriott Corporation?a) What risk-free rate and risk premium did you use to calculate the cost of equity?The theoretical rate of return of an investment with zero risk. The risk-free rate represents the interest an investor would expect from an absolutely risk-free investment over.
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Marriott Corporation Marriott Corporation The final topic in this course incorporates a widely used financial decision-making model, the Capital Asset Pricing Model (CAPM). At this stage of the course, the student must assume a more independent role in the Marriott Corporation case and constructing a quantitative analysis of assessing managerial performance in the Corporation’s operating.
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