Compute the wacc for marriott corporation

Reference no: EM13897300

Case Study- Marriott Corporation: The Cost of Capital (Abridged).

1. Are the four components of Marriott's financial strategy consistent with its growth opportunity?

2. How does Marriott use its estimate of its cost of capital? Does this make sense?

3. It is important to understand that hurdle rate plays a central role in Marriott's financial strategy. Explain how hurdle rates are used at Marriott in the following three activities:

a. Share repurchases

b. Capital Investments and syndications

c. Executive compensation

4. How should hurdle rates be determined?

5. What steps for the computation of equity costs and debt costs are required to estimate Marriott's WACC?

6. Explain how the CAPM is used to compute equity costs. Should the risk-free rate be a short rate or long-term rate? What time period should be used to measure the risk premium?

7. Compute the WACC for Marriott Corporation. What risk-free rate and risk premium did you use to calculate the cost of equity? How did you measure Marriott's cost of debt?

8. What type of investments would you value using Marriott's WACC?

9. What is the overall WACC used for? When should Marriott use divisional hurdle rates?

10. If Marriott uses a single corporate hurdle rate for evaluating investment opportunities in each of its lines of business, what would happen to the company over time?

11. Explain how divisional hurdle rates are measured?

a. Using comparables to get divisional betas

b. Divisional leverage and debt rates

12. Estimate the hurdle rates of each division.

13. What are the differences in the hurdle rates across Marriott's business? Do these differences make sense?

Attachment:- Marriott Corporation_The Cost of Capital.xlsx

Reference no: EM13897300

Questions Cloud

Nitrogen base sequence of a sense chain : Nitrogen base sequence of a sense chain :( ATS, GGA, SST, AAG, AAS), then the chain of messenger RNA formed

Inequality between individuals in the two species : A. inequality between individuals in the two species B. inequality between individuals within a species C. inequality between individuals in two varieties D. inequality between individuals in the two species E. inequality between individuals within a..

What are the expected rates of reimbursement : What are the expected rates of reimbursement

Feel insurance companies should cover : Blepharoplasty is sometimes considered more of a cosmetic procedure than a medically necessary procedure.In what circumstances do you feel insurance companies should cover this procedure?

Compute the wacc for marriott corporation : Compute the WACC for Marriott Corporation. What risk-free rate and risk premium did you use to calculate the cost of equity? How did you measure Marriott's cost of debt?

Explain why the voltage-gated na+ channels : Explain why the voltage-gated Na+ channels can close while the cell is depolarized even though the depolarization was the initial stimulus for the channel opening. Include a discussion on refractory periods and explain why action potentials travel in..

How many different types of avians : How many different types of avians are there in the amazon forest as indicated by biologists?

Liver included in the lymphatic system : Is the kidney and the liver included in the lymphatic system; and if so, what are their functions and how?

What percentage of the land is arable : Description of the foods that make up the average diet of an average person in Jamaica. Break down the diet and provide the percentage of the diet that is carbs, protein, and fat.

User Account

All Pages