When J. Willard Marriott opened his first nine stool A&W restaurant in Washington D.C. on May 20‚ 1927 he had no idea what his name would mean to the world one day. John Willard Marriott was born on September 17‚ 1900. He was from a farm in Utah where he spent his childhood and young adult ages working for his parents. Early on‚ J. Willard was a young mind looking for business. When he was old enough his dad let him travel for the family business. While he was going through Washington D.C. he
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Problems and Questions – Risk Measurement and Hurdle Rates in Practice Rem.: Use 5.5% as your equity risk premium‚ for T. Bonds‚ where none is given‚ and 8.5% as your short term ERP. 1. In December 1995‚ Boise Cascade’s stock had a beta of 0.95. The Treasury bill rate at the time was 5.8%‚ and the Treasury bond rate was 6.4%. a. Estimate the expected return on the stock for a short-term investor in the company. b. Estimate the expected return on the stock for a long-term
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Marriott Corporation: The Cost of Capital T c=income taxes of 1987 / income before income taxes of 1987 = 175.9/398.9 = 44% Step 1:From the Exhibit 3 ß equity for each firm in this industry are below Marriot Corporation 1.11; Hilton Hotels Corporation .76 ; Holiday Corporation 1.35 La Quinta Motor Inns .89; Ramada Inns‚ Inc 1.36. Step 2: For each firm in the industry‚ to estimate bunlevered using the bequity estimate: bequity = [1 + (1-TC)Debt/Equity]bunlevered bunlevered of Marriot= 1.11/[1+(1-
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Marriott Corporation Jacob Piquette Jingjin Cen Chen Huo Wenkao Wu Accurately Measuring Debt Capacity For Marriott Corporation While management was correct in some aspects of measuring debt capacity for Marriott Corporation‚ the method used to obtain the ratio of 6.64 did not include the debt from the previous repurchase‚ grossly overstating the ratio and leading to believe that Marriott Corporation had a large unsused portion of debt capacity. This is shown in Exhibit 5. After thorough analysis
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Marriott Corporation Abstract Marriott Corporation has three divisions – lodging‚ contract services and restaurants – with dissimilar operations. The company uses three separate hurdle rates for the three divisions to value the proposed projects. It is believed that this strategy is more appropriate that using a single firm-wide discount rate because the operations of the three divisions differ drastically. However‚ the company has to ensure that the company uses an appropriate discount rate for
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Lutz November 30th | [Marriott Case Study] | Professor Triantis | 1. What is the weighted average cost of capital (WACC) for Marriott Corporation based on its target debt-equity ratio? Use a 34% tax rate. WACC = [(E/D+E) * Re] + [(D/D+E) * Rd(1-Tc)] Be = [1 + (1-Tc) d/e]*Ba 1.11 = [1+(1-.34}.41/.59]*Ba Ba = .76098 Using statistics from page four of the assigned case study: Risk Free rate (Rf) = 8.72 % (10yr rate) Rd = Rf + spread Spread = Debt rate premium above gov (1.3%)
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Their reputation derives from the conduct of the Marriott associates who create this professional business environment on a day to day basis. The hotel industry can be a very unpredictable environment. Employees at the Marriott are confronted with situations on a daily that test their values‚ beliefs and judgments. The reputation of the Marriot is built upon the actions of their employees at these times. It is vital for each member of the Marriott staff to understand the legal and ethical responsibility
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Marriott Corporation Case Study 1) The Marriott Corporation implemented for key elements into their financial strategy: manage rather than own hotel assets invest in projects that increase shareholder value‚ optimize the use of debt in the capital structure‚ and repurchase undervalued shares 2) Marriott uses WACC to measure the opportunity costs of capital of investments with similar risks. Each division of Marriott has a different cost of capital‚ based on debt capacity‚ debt cost‚ and equity
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MARRIOTT INTERNATIONAL‚ INC. { PEST ANALYSIS } External Environment Analysis Every organization has analyzed its strength and weakness. Nevertheless‚ the external environment is also the important factor that affects the future of the organization. In the environment that we are living nowadays has changed all the time. Therefore‚ it has to analyze on the external factors. PEST Analysis is the tool and method to handle the marketing‚ which is one of the well-known methods to analyze the external
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I. Problem Dan Cohrs‚ the vice president of project finance at Marriott Corporation‚ is preparing his annual recommendations for the hurdle rates for each of Marriott’s three divisions: lodging‚ contract services‚ and restaurants. However‚ this is a complicated process because finding beta‚ cost of debt‚ and cost of equity in order to find weighted average cost of capital‚ or WACC‚ must be calculated using proxy firms and divisional data. The firm’s use of WACC is directed towards
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