Marriot Case Marriot use the Weighted Average Cost of Capital to estimate the cost of capital for the corporation as a whole and for each division‚ and the hurdle rate is updated annually.(WACC = (1-Tc) * (D/A) * R[D] + (E/A) * R[E]) Marriot’s Tax Bracket = 175.9/398.9 = 44% Division’s asset weight to the corporation: Lodging = 2777.4/4582.7 = 0.59 Contract = 1237.7/4582.7 = 0.28 Restaurant = 567.6/4582.7 = 0.13 Risk free rate is 30 years T-Bond = 8.95% (Lodging use long-term debt)
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Introduction For this assignment‚ I chose the American multinational corporation Boeing (The Boeing Company) which is one of the largest aircraft and aerospace manufacturer in the world. I thought that it would be a good idea to take Boeing as it has been into some media frenzy recently‚ because of its latest commercial aircraft the 787” Dreamliner” grounded by Federal Aviation Administration (FAA) and aviation authorities around the world. A good case to see how a company future assets valuation
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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 Target D/D+S Rdebt(1-T) S/D+S Requity WACC 74% 0.0563 26% 21.02% 9.63% Page 1 Sales Weighted Levered Beta 1.56
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Risk – Free Rate 3% + Beta Coefficient .36 Market Risk Premium 8% Cost of Equity 5.88% + Risk - Free Rate 3.% Weighted Cost of Equity 3.52% X Percentage of Total Capital Supplied by Equity 60% + Before Tax Cost of Debt 5.66% WACC 5..00% Weighted Cost of Debt 1.53% Before Tax Operating Profit in % 100% After Tax Cost of Debt 3.83% X X After Tax Operating Profit in 67.6% 40% of Total Capital Supplied by Debt 40% - Income Tax Rate 32.4% Rate of Return of
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The Boeing Company is a major player in the aerospace and defense industry with over 150‚000 employees. As of 2006 they led the commercial and defense aircraft market as the company with the largest total revenue. (Defense News ‚ 2007). The corporation is divided into five separate business units/services. Commercial Airplanes and Integrated Defense Systems are the two major components. The other three units span control over research and development‚ services and financial services; Phantom Works
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buybacks and strong dividends. About 43.8% of the total capital of the company comes from debt and the remaining comes from equity. The cost of the different components of its capital structure are – debt: 2.92% (after-tax cost)‚ and equity: 9.49%. The WACC is 6.61%‚ based on the capital structure outlined. The effective tax rate is 35.4%. AT&T has had dividend growth for the last 25 years. The dividend growth this year was 2.5% and the last year was 12.7%. Dividends declared totalled $1.61 per share
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The Boeing Company operates in the industry of aerospace and defense. The largest aerospace company‚ Boeing is the #2 maker of large commercial jets (behind rival Airbus) and the #2 defense contractor behind Lockheed Martin. The aerospace and defense industry did suffer the effects of a post-9/11 society. Because of the weakened and fearful tourism market‚ spending on commercial aircraft did decrease. But recently‚ revenues have improved considerably as travelers are becoming more comfortable with
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and partners along the way and outperform the competition. For Boeing‚ trying to become the global leader in its industry again meant that they needed to launch an exceptional‚ better aircraft than their competition‚ Airbus. They were also relying on foreign partners more than ever before to get every part ready in time for assembly. With the launch of their 25th model named the 787 Dreamliner‚ scheduled for delivery in 2008‚ Boeing promised to provide airlines with a fuel efficient aircraft and
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Summary William Boeing founded the Boeing airplane company in early 20th century. After strings of acquisition and mergers‚ this company grew and became the current largest world aerospace industry. Followed by previous reorganizations in 19990s‚ this company decided to start its branding campaign in May 2001. This campaign was consisting of lots of effort and structural changes for the first time in this corporate history. The media was showing the initial success of this campaign just after
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I. Boeing History | | a. building blocks | | b. growing UTAC | | c. deregulation | | d. the jet age | | II.Boeing as a Market Leader | | a. threat of competition | | b. the attack | | c. management | | III. Threat of New Competition | | IV. Future of Boeing-Creation of Dreamliner | | I. The Boeing History A. Building Blocks A determined man once said‚ “We are embarked as pioneers upon a new science and industry in which
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