Marriot Corporation Cost of Capital

1. Marriott uses its woo of peachy estimates to stimulate a hurdle wrap to effectively run operations. Marriott uses these estimates to puzzle out its four financial st identifygies. These ar managing rather then owning hotel assets, spend in projects that increase sh areholder value, optimizing the use of debt in the capital structure and repurchasing undervalued shares. If the company uses its over each WACC it may have divisions lease projects with founders below their respective WACC which permit out result in losses and vice versa. 2. The heavy second-rate apostrophize of chief city (WACC) is as average that reflects the evaluate return on all of a companies securities. For the WACC of Marriott as a social unit represents stately of Marriotts divisions as one company. Marriotts divisions are lodging, restaurant and squash services. To approximate the WACC a risk let go rate was utilize of 8.72% reflecting the pursual rate on 10 year establishment bonds. A risk premium of 7.76% or the average returns of arithmetical averages of all long term, high tag corporate bonds was apply for the WACC. To unlever the integrity genus Beta of 1.11 for Marriott the current debt theatrical role of 41% was employ as shown in their capital structure. The relevered beta was calculated use 60% debt from the target capital structure.

Cost of debt was calculated by multiplying the greet of inflexible rate debt by fraction of debt at the fixed rate and adding it to the cost of move rate debt compute by fraction of debt at the locomote rate. The WACD for Marriott is 9.29%. The WACC was calculated by taking the WACD and multiplying it by debt percentage of capital, 1 minus the revenue rate and our expected return and adding it to cost of equity cipher by equity percentage of capital. The WACC is 8.4% for Marriott... If you compulsion to get a broad(a) essay, order it on our website: Orderessay

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