Questions Case #5 – Marriott Corporation: The Cost of Capital 1. Are the four components of Marriott’s financial strategy consistent with its growth objective? 2. How does Marriott use its estimate of its cost of capital? Does this make sense? 3. 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? b. How did you measure Marriott’s cost of debt? 4. If Marriott used a single corporate
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What’s your real cost of capital? By James J. McNulty‚ Tony D. Yeh‚ William s. Schulze‚ and Michael H. Lubatkin Harvard Business Review‚ October 2002 Issue of the article: valuing investment projects Number of pages: 12 Daniel Miravet Campos Part 1. Executive summary This article is fundamentally based on the exposition of a new method to calculate the cost of capital for a company (MCPM)‚ to meet the inefficiencies of the current one (CAPM). In valuing any investment project or
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Costs of Production July 2011 Topics to be Discussed Measuring Cost: Which Costs Matter? How do Cost Curves Behave? – Cost in the Short Run – Cost in the Long Run How to Minimize Cost? How to draw Implications for Business Strategy? Topics to be Discussed Production with Two Outputs: Economies of Scope Dynamic Changes in Costs: The Learning Curve Estimating and Predicting Cost Measuring Cost: Which Costs Matter? Accountants tend to take a retrospective view of firms’ costs‚ whereas
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Cost Behavior Cost behavior is term for describing whether a cost changes when the level of output changes. The cost can vary proportionately with the changes in the level of activity or unaffected by changes in the level of activity. Costs can be variable‚ fixed‚ or mixed. A cost that does not change in total as output changes is a fixed cost. A variable cost‚ on the other hand‚ increases in total with an increase in output and decreases in total with a decrease in output. Understanding how costs
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Level Material Cost Classifications Consult Ch. 6 & 7 of Health Care Finance and other sources to complete the form. This worksheet requires you to match the definitions and examples of types of cost‚ and the types of centers where costs occur. Part 1: For each term in Column A‚ select the correct definition from Column B on the right. Write the corresponding letter of the definition next to the term. |Column A | |F |Indirect costs
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Costs and budgets The management of costs is a very important aspect of managing financial resources. If costs are not managed effectively‚ it can lead to profits being damaged and the business potentially unable today its expense. Keeping within a budget‚ increasing income in order to cope with change and making sure that working capital is available and money and set aside for emergencies is all part of the balancing exercise. Costs managed to budget McDonald’s budget was adverse as there
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Summer2011-Microeconomics-Exam Two Practice 1. To calculate the total utility of consuming N products: A. add the additional satisfaction of consuming each product up to N and multiply by its price. B. add the total satisfactions of consuming each product up to N. C. multiply the additional satisfaction from consuming the Nth product by its price. D. multiply total satisfaction from consuming N products by N. 2. Suppose that the following table lists the utility that Steve receives from
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What methods of Index Number calculation is used to calculate Cost of Living Index (CLI). An index number measures the relative change in the price‚ quantity‚ value or some other item of interest from one time period to another. It is found by calculating the ratio of the current value to the value at another time point or at a different geographical location. The different types of simple index that are used are - Price Relative‚ Quantity Relative‚ Value Relative. A price index is a weighted
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ACT 2131 – QUIZ 1 solution MATRIX NO: ______________________ Answer all questions by using OMR form given 1. Managerial accounting: A. has its primary emphasis on the future. B. is required by regulatory bodies such as the SEC. C. focuses on the organization as a whole‚ rather than on the organization’s segments. D. Responses a‚ b‚ and c are all correct. 2. The plans of management are expressed formally in: A. the annual report to shareholders. B. Form 10-Q submitted
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have a sound knowledge of cost behaviour ie fixed costs‚ variable costs‚ semi-variable costs and sunk costs. Answer: Understanding cost behaviour helps manager in anticipation of changes in cost when there is a change in their activities like production‚ sales‚ inventory pile up etc. It provides good assistance in planning‚ cost management and decision making. A number of behaviour patterns exist ranging from fixed to variable and from linear to curvilinear. Many cost predictions techniques are
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