Marriott International‚ Inc. is a widely recognized and diversified global lodging firm which engages in the franchise and operation of hotels‚ timeshare properties‚ and housing properties. It operates through the following business segments: North American Limited-Service; North American Full-Service; and International. The firm operates hotels the management model‚ franchise model‚ and the leased and owned model. The company operates 16 brands that cover full-service‚ extended-stay hotels‚ and
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traditional. Resorts‚ suites‚ hotels‚ Marriott brands Luxury lodging | Full service lodging | Selected service lodging | Extended stay lodging | timeshare | The Ritz Carlton | Marriott hotels and resort | Courtyard by Marriott |
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What is the weighted average cost of capital (WACC) for Marriott Corporation? WACC = (1 - τ)rD(D/V) + rE(E/V) D = market value of debt E = market value of equity V = value of the firm = D + E rD = pretax cost of debt rE = after tax cost of debt τ = tax rate = 175.9/398.9 = 44% Cost of Equity Target debt ratio is 60%; actual is 41% [Exhibit 1] βs = 1.11 βu = βs / (1 + (1 – τ) D/E) = 1.11/(1 + (1 – .44) (.41)) = 0.80 Using the target debt ratio of 60%: βTs = βu (1 + (1 – τ) D/E)
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To : President‚ Marriott Corporation From : FLO299 Subject : Marriott Corporation – The Cost of Capital Date : April 6‚ 2010 The Importance of the Cost of Capital The cost of capital is important as it forms the basis for Marriott’s investing and financial decisions. By understanding and knowing the cost of capital‚ Marriott is able to select relevant investment projects for the company‚ determine incentive compensation‚ and repurchase undervalued shares when needed. The returns
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Making Final Project Case analysis: Marriott Corporation Introduction and background The Marriott Corporation‚ an American firm‚ was founded in 1927 by J.Willard Marriot.The company began as a small beer stand and soon began to sell food and provided lodging that expanded rapidly. With the help of his wife Alice‚ the family owned business had 45 restaurants in nine states by 1940 and grew into one of the leading service companies. The Company has three major lines of business: lodging
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EXECUTIVE SUMMARY Marriott International envisions itself to be the world’s lodging leader. Its mission is to provide the best possible lodging services experience to customers who vary in backgrounds‚ language‚ tradition‚ religion and cultures all around the world. Marriot is committed to environmental preservation through using environment-friendly technology and engages in social responsibility and community engagement. We value our shareholder’s so we will only take steps that will ensure
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houses and stores. Every day‚ we go to work hoping to do two things: share great coffee with our friends and help make the world a little better. It was true when the first Starbucks opened in 1971‚ and it’s just as true today. Back then‚ the company was a single store in Seattle’s historic Pike Place Market. From just a narrow storefront‚ Starbucks offered some of the world’s finest fresh-roasted whole bean coffees. The name‚ inspired by Moby Dick‚ evoked the romance of the high seas and the
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Case #3 “Marriott Corporation” The Cost of Capital” What is the weighted average cost of capital for the Marriott Corporation and cost of capital for each of its divisions? – What risk-free rate and risk premium did you use to calculate the cost of equity? – How did you measure the cost of debt? – How did you measure the beta for each division? Solution What risk-free rate and risk premium did you use to calculate the cost of equity? – Risk-free rate proxy The risk-free
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John Willard Marriott September 17‚ 1900 – August 13‚ 1985 Born on September 17‚ 1900 in Marriott Settlement‚ Utah‚ as the eldest son of a poor farmer‚ J.W. Marriott was said to have learned to ride a horse before he could walk. Early in his upbringing‚ Marriott was held to a very strict and high standard of conduct from his father. His father also gave him responsibility at an early age making him a sheepherder on the farm to help his family. At the age of 19‚ he preached the gospel as a Mormon
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Harvard Business School 9-298-101 Rev. March 18‚ 1998 Marriott Corporation: The Cost of Capital In April 1988‚ Dan Cohrs‚ vice president of project finance at the Marriott Corporation‚ was preparing his annual recommendations for the hurdle rates at each of the firm ’s three divisions. Investment projects at Marriott were selected by discounting the appropriate cash flows by the appropriate hurdle rate for each division. In 1987‚ Marriott ’s sales grew by 24% and its return on equity stood at 22%
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