Preview

Marriott Solutions WACC Lodging

Satisfactory Essays
Open Document
Open Document
73 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
Marriott Solutions WACC Lodging
Sheet1

Marriott Cost of Capital Lodging Division

Tax Rate

0.44
Equity Beta
D/D+S

Lodging
Hilton
Holiday
La Quinta
Ramada
Average

0.76
1.35
0.89
1.36
1.09

14%
79%
69%
65%
0.5675

S/D+S
86%
21%
31%
35%
0.4325

D/S

Unlevered Beta
0.16
3.76
2.23
1.86
2.00

0.65
0.28
0.28
0.48
0.42

Target D/D+S
Target D/S Levered Beta
74%
2.85
1.62

Costs of Equity:
Rf
Lodging

MRP
8.95%

7.43%

Beta
Requity
1.62 21.02%

Costs of Debt:
Rf
Lodging

8.95%

Spread
Tax rate Rdebt(1-T)
1.10%
0.44 0.0563

WACCs:
Lodging

Target D/D+S Rdebt(1-T) S/D+S Requity WACC
74%
0.0563
26% 21.02%
9.63%

Page 1

Sales Weighted Levered Beta
1.56
Continue Reading
View Writing Issues

You May Also Find These Documents Helpful

  • Satisfactory Essays

    Border Hotel Case Calculations
    • 1302 Words
    • 21 Pages

    Border Hotel Case Calculations

    Revenue Estimates Revenue Item 100% Monthly 75% Monthly 50% Monthly Notes Rooms $2,956,500 $2,217,375 $1,478,250 8,100 daily Leases $180,000 $135,000 $90,000 TOTAL REVENUE $3,136,500 $2,352,375 $1,568,250 Expences TOTAL VARIABLE COSTS $454,000 $340,500 $227,000 TOTAL FIXED COSTS $1,403,000 $1,403,001 $1,403,002 TOTAL EXPENSE BEFORE IT $1,857,000 $1,743,501 $1,630,002 EBIT $1,279,500 $608,874 -$61,752 Depreciation $320,000 $320,001 $320,002 EBITDA $1,599,500 $928,875 $258,250 Furnishing Interest $110,000 $110,000 $110,000 20yr Mortgage Interest $182,000 $182,000 $182,000 TOTAL INTEREST $292,000 $292,000 $292,000 TAXES (40%) $395,000.00 $126,749.60 -$141,500.80 Furnishing Principal $180,160 $180,160 $180,160 20yr Mortgage Principal $49,713 $49,713 $49,713 TOTAL PRINCIPAL $229,873 $229,873 $229,873 NET INCOME $362,627 -$39,749 -$442,124 DIVIDEND PAYMENT $29,010 -$3,180 -$35,370 RETAINED EARNINGS $333,617 -$36,569 EBIT/INTEREST 4.38 2.09 (0.21) EBITDA/INTEREST 5.48 3.18 0.88 BURDEN $675,121.67 $675,121.67 $675,121.67 EBIT/BURDEN 1.90 0.90 (0.09) ROE= Net Income/OE (H1) 32.97% -3.61% -40.19% Revenue Estimates Revenue Item 100% Monthly 75%…

    • 1302 Words
    • 21 Pages
    Satisfactory Essays
    Read More
  • Good Essays

    Salem Telephone Company Case Analysis
    • 454 Words
    • 4 Pages

    Salem Telephone Company Case Analysis

    Power: 4.7 4.7 4.7 Operations (hourly personnel): 24 24 24 TOTAL: 28.7 28.7 28.7 3.) CONTRIBUTION MARGIN INCOME STATEMENT SALES/REVENUE Intracompany: 205 hrs * $400/hr = $82,000 Commercial: 138 hrs * $800/hr = $110,400 Total: 343 hrs $192,400 VARIABLE EXPENSES Power: $4.7/hr * 343 hrs = $1,612.10 Operations (hourly personnel): $24/hr * 343 hrs = $8,232.00 Total: $9,844.10 FIXED EXPENSES - Rent $8,000 - Custodial services $1,240 - Computer leases $95,000 - Maintenance…

    • 454 Words
    • 4 Pages
    Good Essays
    Read More
  • Satisfactory Essays

    Week 2
    • 420 Words
    • 2 Pages

    Week 2

    Cost of equity = Rf + (Rm-Rf) beta = 3.5% + 7.5% X 1.3 = 13.25%…

    • 420 Words
    • 2 Pages
    Satisfactory Essays
    Read More
  • Powerful Essays

    Marriott Case |
    • 2517 Words
    • 11 Pages

    Marriott Case |

    Dan Cohrs is preparing the annual hurdle rates for the three divisions of Marriot Corporation (Lodging, Contracts, and Restaurants) which will have a significant impact on the firm’s financial and operating strategies. Marriott’s has been truthful to its operating strategy to remain a premier growth company, Marriott’s sales and earnings per share have doubled over the last four years. In 1987 Marriot’s sales rose 24%, the return on equity was 22% and profits were $223 million. Lodging consisted of 51% of Marriott’s profits, while contracts services and restaurants amounted to 33% and 16% respectively. However, the sales mix is not proportionate to relative profits, where 41% of sales are generated from lodging, 46% from contract services and 13% from restaurants. One of the main factors in Marriot’s lodging success has been their strategy to syndicate hotels to limited partners with a three percent management fee and 20% of profits before depreciation and debt service. One of Marriot’s key strategic elements is to optimize the use of debt in the capital structure for which it uses an interest coverage target instead of debt to equity ratio to determine the ideal amount of debt to hold.…

    • 2517 Words
    • 11 Pages
    Powerful Essays
    Read More
  • Satisfactory Essays

    Alltel Pavilion Case Appendix
    • 493 Words
    • 2 Pages

    Alltel Pavilion Case Appendix

    Appendix 2. a) Parking, Concession, Merchandise cost includes both fixed and variable costs. Variable Costs = | 10% * Revenue | | | Fixed Costs = | Total expense - | Variable Cost | | | | | | Costs | Variable | Fixed | Total Cost | Parking expense | 19,767 * 10% = | 4,448 - 1,976.70 = | | | $ 1,976.70 | $ 2,471.30 | $ 4,448.00 | Concession expense | 79,273* 10% = | 43,356 - 7,927.30 = | | | $ 7,927.30 | $ 35,428.70 | $43,356.00 | Merchandise expense | 36,428 * 10% = | 17,826 - 3,642.80 = | | | $ 3,642.80 | $ 14,183.20 | $17,826.00 | Total ancillary expense | $ 13,546.80 | $ 52,083.20 | $65,630.00 | | | | | Total variable costs calculation: | | | | Total ancillary expense (variable) | $ 13,546.80 | | | Total other variable expense | $ 14,323.00 | | | Total variable costs | $ 27,869.80 | | | Total variable cost/Total revenue | $ 0.08 | | | | | | | Total fixed costs calculation: | | | | Total ancillary expense (fixed) | $ 52,083.20 | | | Guarantee/Talent costs | $ 160,635.00 | | | Production expense | $ 15,506.00 | | | Operations expense | $ 14,991.00 | | | Advertising expense | $ 20,030.00 | | | Total fixed costs | $ 263,245.20 | | | | | | | Total revenue per capita | | | | Revenue from ticketing | $ 26.99 | | | Revenue from ancillaries | $ 13.09 | | | Total revenue per capita | $ 40.08 | | | 3.…

    • 493 Words
    • 2 Pages
    Satisfactory Essays
    Read More
  • Satisfactory Essays

    Fall Homework
    • 889 Words
    • 4 Pages

    Fall Homework

    6. Suppose Garageband.com has a 28 percent cost of equity capital and a 10% before tax cost of debt capital. The firm’s debt-to-equity ratio is 1.0. The tax rate is 30 percent. What is the firm’s WACC? WACC = .5(10(1-.3)+.5(28)=17.5%…

    • 889 Words
    • 4 Pages
    Satisfactory Essays
    Read More
  • Satisfactory Essays

    ahahahahaa
    • 759 Words
    • 4 Pages

    ahahahahaa

    We then determined a WACC of 5.37% based on a cost of equity of 8.85% (calculated with beta of 1.76, risk fee rate of 0.05%, and market risk premium of 5%) and estimated the cost of debt at 6%.…

    • 759 Words
    • 4 Pages
    Satisfactory Essays
    Read More
  • Satisfactory Essays

    Week 2 Homework
    • 370 Words
    • 2 Pages

    Week 2 Homework

    4. Inventory turnover (Cost of goods/Average Total Assets / 2): $5,800,000/ $1287360 + 1716,480/ 2= 3.86…

    • 370 Words
    • 2 Pages
    Satisfactory Essays
    Read More
  • Powerful Essays

    Business Computing
    • 1595 Words
    • 7 Pages

    Business Computing

    Throughout 2011, the one bedroom apartment was rented for a total of 63 nights, the lowest of all the available bedrooms available. After assessing the spreadsheet, the low profitability of this bedroom is due to the low average number of nights per booking. At 4.5, the average stay in this bedroom is very low compared to other rooms. Discounts of 15% are applied if booking is for more than 6 nights which does not affect this room’s profitability a great deal as the average stay is under the 6 night 15% discount offer. Nevertheless, takings on this room are lower than any other room before even considering these discounts as the rooms would be targeted to shorter stay leases which reduces total profit potentials. Also eating into profits are the expenses incurred for cleaning the apartment ($40) after each resident has vacated. The higher turnover of occupants means that cleaning expenses for this room total a higher amount than any other room.…

    • 1595 Words
    • 7 Pages
    Powerful Essays
    Read More
  • Good Essays

    Wacc
    • 1960 Words
    • 8 Pages

    Wacc

    Weighted Average Cost of Capital is the weighted Average of the Marginal Costs of the Capital Components employed to acquire a long term asset (make a new real investment in things like Plant and Equipment, R&D, Human Capital, a new Product, a new Process, or a new Marketing Channel…

    • 1960 Words
    • 8 Pages
    Good Essays
    Read More
  • Powerful Essays

    Wyndham Vacation Ownership (WVO)
    • 1722 Words
    • 7 Pages

    Wyndham Vacation Ownership (WVO)

    In the recent months my kindred doled out gathering accomplices and I have been cooperating on an exploration extend. The six members comprised of, Tifany Lenoir, Shanae Mackey, Elbony McMiller, Ritul Patel, Kandi Robinson and I; we all collaborated on Minimizing Employee Burnout within Wyndham Vacation Ownership (WVO). Groups are for the most part created to accomplish a goal or objective as a unit. It is imperative to understand that working in groups adjusts productively each of the member’s performance towards the objectives. We ask ourselves for what good reason is it we form groups? Through the span of this paper I will clarify altogether the flow and elements of a group and a team. However, please take note…

    • 1722 Words
    • 7 Pages
    Powerful Essays
    Read More
  • Satisfactory Essays

    Hampton Inn Case Study
    • 65 Words
    • 1 Page

    Hampton Inn Case Study

    Thank you for the opportunity to work for (Hampton Inn). I appreciate the time you spent with me. I excited to be apart of the (company name family). Looking forward to working with everyone and the experiences that you will have to offer. I will put my best foot forward in upholding the reputation of the Hampton Inn.…

    • 65 Words
    • 1 Page
    Satisfactory Essays
    Read More
  • Better Essays

    Research Paper: Marriott Hotels, Resorts, and Suites
    • 1318 Words
    • 6 Pages

    Research Paper: Marriott Hotels, Resorts, and Suites

    References: Lu, Z., & Chiang, D. (2003). Strategic issues faced by Ontario hotels. International Journal of Contemporary Hospitality Management, 15(6), 343-345. Retrieved from http://search.proquest.com/docview/228384815?accountid=35796…

    • 1318 Words
    • 6 Pages
    Better Essays
    Read More
  • Good Essays

    Rosewood Hotels Nad Resorts
    • 852 Words
    • 4 Pages

    Rosewood Hotels Nad Resorts

    Rosewood Hotels and Resorts L.L.C. is faced with a marketing dilemma; they want to increase multi-property guest stays with out diminishing the current brand images of their existing properties. In order to increase awareness of the other properties to those who are currently loyal to particular estates, Rosewood has considered adding a corporate brand title to all of its properties. The problem lies in whether or not this will “cheapen” the experience for those who feel as though they are getting away from the “cookie-cutter norm” of other corporate luxury hotel chains.…

    • 852 Words
    • 4 Pages
    Good Essays
    Read More
  • Satisfactory Essays

    Hubbart Formula
    • 418 Words
    • 2 Pages

    Hubbart Formula

    The Casa Vana Inn, a 200 room property, is projected to cost $9,900,000 inclusive of land, building, equipment, and furniture. An additional $100,000 is needed for working capital, bringing the total cost of construction and opening to $10,000,000. The hotel is financed with a loan of $7,500,000 at 12% annual interest and cash of $2,500,000 provided by the owners. The owners desire a 15% annual return on their investment. A 75% occupancy is estimated; thus, 54,750 rooms will be sold during the year (200 x 0.75 x 365). The income tax rate is 40%. Additional expenses are estimated as follows:…

    • 418 Words
    • 2 Pages
    Satisfactory Essays
    Read More

Related Topics