Marriott Corporation: The Cost of Capital Executive Summary J. Willard Marriott started Marriott Corporation in 1927 with a root beer stand‚ expanding it into a leading lodging and food service company with sales of over $6 billion by 1987. At the time‚ Marriott had three main lines of business‚ lodging‚ contract services and restaurants‚ with lodging generating about 51% of company’s profits. The four key elements of Marriott’s financial strategy were managing hotel assets rather than owning‚
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A nation of equality‚ a wish come true. Knowledge Isn’t Power‚ by Paul Krugman simply conveys about rising inequalities in wages and salaries of Americans. He proclaimed how the reason of inequality is not education‚ but power. He also stated that there are many actions that could be taken to "redress the inequality of power; only if there is a major party willing to move policy in exactly the opposite direction" i quote him. The thing that I disagree with the author is how he claimed that
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1. How does Marriott use its estimate of its cost of capital? Does this make sense? Marriott has defined a clear financial strategy containing four elements. To determine the cost of capital‚ which also acted as hurdle rate for investment decision‚ cost of capital estimates were generated from each of the three business divisions; lodging‚ contract services and restaurants. Each division estimates its cost of capital based on: Debt Capacity Cost of Debt Cost of Equity All of the above are
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Question 6 What is the cost of capital for the lodging and restaurant divisions of Marriott? Answer: The cost of capital for lodging is 9.2% and the cost of capital for restaurants is 13.1% Calculation: WACC = (1-t) * rd * (D/V) + re* (E/V) Where: D= market value of DEBT re = aftertax cost of equity E = market value of EQUITY V = D+E rd = pretax cost of debt t = tax rate To calculate the formula above‚ we need to determine each component Tax rate (t) 56% --> calculated before LODGING
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In Praise of Cheap Labor Bad jobs at bad wages are better than no jobs at all. By Paul Krugman|Posted Friday‚ March 21‚ 1997‚ at 3:30 AM ET For many years a huge Manila garbage dump known as Smokey Mountain was a favorite media symbol of Third World poverty. Several thousand men‚ women‚ and children lived on that dump--enduring the stench‚ the flies‚ and the toxic waste in order to make a living combing the garbage for scrap metal and other recyclables. And they lived there voluntarily‚ because
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Carlton‚ Inc.‚ a leading lodging company with over 3‚100 lodging properties in the United States and 66 other countries and territories (Marriott International‚ Inc. Corporate Headquarters‚ 2008). My key task is to discuss market segmentation‚ targeting and positioning strategies of the company with the following brands: Marriott Hotels & Resorts and Courtyard by Marriott in the same marketplace‚ Asia-Pacific. As the fast expansion in economy of Asia-Pacific‚ the hospitality industry has a bright perspective
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HBR Case #1 Marriott Corporation: The Cost of Capital Group 16—Tutorial Mon 11:30am Group members LIU Ying‚ Chloe | 1155019350 | LUO Yingying‚ Irika | 1155020931 | TIAN Tian‚ Sarah | 1155019114 | WU Jiajie‚ Jesse | 1155019061 | 17 September 2012 Executive Summary By 1987‚ Marriott Corporation had grown into a large multi-dimensional company with over $5 billion assets in lodging‚ contract services and restaurants. The company enjoyed fast growth in both sales and assets at around
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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
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Brief overview of Marriott group of hotels Marriott group of hotels is association with International Tourism partnership. It is an association with organizations having a participation of organizations inside the travel and tourism industry. The point of International Tourism Partnership is to give the capacity and information to the improvement of handy answers for a dependable business. The establishing part of International Tourism partnership is Marriott. It has helped towards the ’practical
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Over time the Bill of Rights was amended to meet the needs of an evolving nation. These include the 13th Amendment which outlawed slavery‚ the 14th Amendment guaranteed equal protection for African Americans‚the 15th Amendment which gave African Americans the right to vote‚ and the 19th amendment which gave women the right to vote. The Civil Rights Movement was a defining moment in history because it denounced the unequal treatment of humans based on race. During the 1950’s‚ the United States operated
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