MARRIOTT

What is the overall weighted average cost of capital for Marriott Corporation? (Use a corporate tax rate of 34%). What type of investments would you value using Marriott’s WACC?
Cost of debt：8.95%+1.3%=10.25%
Cost of equity：8.95%+1.64*7.43%=21.14%
實際beta=1.11，根據exhibit 1，長期債務為24.99億美元，權益價值為35.64億美元(30元*118.8百萬股)，可以得出D/V=24.99/35.64=41%標的資本結構D/V=60%，所以必需做出調整。
V=D+E，D/V=41%，E/V=59%
Beta of asset=(E/V)*beta of equity=0.59*1.11=0.655
Beta of equity=(V/E)*beta of asset=(1/0.4)*0.655=1.64
Risk free rate：美國30年期政府公債利率為8.95%
Risk premium：exhibit 5 S&P500和美國長期政府公債的利率差為7.43%
WACC：(1-0.34)*0.6*10.25%+0.4*21.14%=12.515%
If Marriott used a single corporate hurdle rate for evaluating investment opportunities in each of its lines of business, what would happen to the company over time?
風險高的項目，會有高的淨現值，所以公司會傾向選擇這些風險高的項目，而那些本來可行的低風險項目，在單一的hurdle rate之下，已不會被投資。
What are the hurdle rates (costs of capital) for the lodging and restaurant divisions of Marriott? Should the debt and equity costs differ across divisions? Why or why not?
Lodging
可根據其他可比公司資產的beta值計算Marriott公司旅館業的資產beta值。(根據可比公司權益beta，乘上權益比率，得到資產beta，在求加權平均)
Beta of asset：0.65*0.23+0.28*0.5+0.28*0.05+0.48*0.22=0.41
Beta of equity：(1/0.26)*0.41=1.58
Cost of equity：8.95%+1.58*7.43%=20.69%
Cost of debt：8.95%+1.1%=10.05%
WACC：(1-0.34)*0.74*10.05%+0.26*20.69%=10.28%
Restaurant
可根據其他可比公司資產的beta值計算Marriott公司餐飲業的資產beta值。
Beta of asset：1.39*0.05+1.31*0.08+0.54*0.02+0.75*0.03+0.72*0.67+1.04*0.15
=0.85
Beta of equity：(1/0.6)*0.85=1.42
Cost of equity：8.72%+1.42*7.43%=19.27%
Cost of debt：8.72%+1.4%=10.12% WACC：(1-0.34)*0.4*10.12%+0.6*19.27%=14.23%
4.What is the cost of capital for Marriott’s contract services division? How can you estimate this hurdle rate without publicly traded comparable companies?
沒有公開交易可比公司，但有Marriott公司的資產beta值，也有旅館業和餐飲業資產的beta值，可以推出合同服務的資產beta值。
0.655=0.61*0.41+0.12*0.85+0.27*beta of asset(CS)
Beta of asset(CS)=1.13
Beta of equity：(1/0.6)*1.13=1.88
Cost of