1 Marriott Corporation: Cost of Capital Analysis In this paper, I shall attempt to determine the optimal cost of capital for Marriott Corporation using the WACC method and compare it against the cost of capital of a division with the firm to determine the implications of using a “firm wide” cost of capital Cost of Capital for the firm Based on the data given in the case, the beta equity for Marriott Corporation is currently set at 1.11. However, given the changes in the debt component in Marriott’s
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determine an appropriate Cost of Capital for Marriott Corporation. To do so, we have based our assesment on the information and assumptions contained in the text of Dan Cohrs “Marriott Corporation: The Cost of Capital”. As stated in the lecture, Marriot Corporation is composed of three different divisions: lodging, restaurants and contract services. So, during this workshop we calculated a different cost of capital for each one of the three divisions. To determine the Cost of Capital for each division
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Harvard Business School 9-282-042 Rev. September 15, 1986 Marriott Corporation The idea of repurchasing shares was no stranger to Bill Marriott by January 1980. Almost five million shares of common stock had been repurchased on the open market by Marriott Corporation during 1979 at a total cost of $74 million and an average price of $15.16 in the belief that they were undervalued—a belief that still was not fully reflected in the market price. At $19 5/8, the stock was selling at only
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Introduction to Hospitality – Tourism is not just about the facilities and attractions provided for visitors. It is about people and especially about the relationship between the customer and the individual providing service. Everybody employed in tourism needs to have the knowledge, skills and attitudes to provide the standard of product and service that customers expect. Knowing about the tourism industry, its component parts and especially where you fit in is an important starting point to a
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Marriott Case Study In this summary, we are going to discuss Marriott’s strategy points for maintaining its status as a premier growth company, weighted average cost of capital (WACC), divisional hurdle rates, and justification of numbers used in calculations. Marriott’s strategic plan to maintain its status as a premier growth company can be broken into four distinct areas: managing (as opposed to owning) hotel assets, choosing investments that increase shareholder value, optimizing the use
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Nov. 25th, 2014 Marriott Case 1) Marriott Corporation is trying to determine the proper WACC it which to value it’s projects in the near future. A problem exists because the market (especially the bond market) has been quite volatile, which affects the risk free rate. The risk free rate is the foundation of CAPM, which will be needed to determine the WACC. 2) The problems arise because the four key elements of Marriott’s financial strategy are managing hotel assets rather than owning, investing
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was high and interest coverage was low. The management team would have the incentive to undertake more risky projects and harm the bondholders even more. 3. Now, consider two different conceptions of managers’ fiduciary duty (see page 7-8 of the case). The narrow view (the “shareholder view”) is that managers are responsible for serving the interests of just the shareholders. The broader view (the “stakeholder view”) is that managers should also consider interests of corporate stakeholders more
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Net Present Value and Project Evaluation IUJ, Spring 2006 Pham Thi Thuy Ha Marriott Corporation, an American firm, has 3 major lines of business: lodging, contract service and restaurants. Its growth objective is to remain a premier growth company. The four components of its financial strategy are consistent with this growth objective for the reasons: Manage rather than own hotel assets: Marriott sold its hotel assets to limited partners to reduce assets and thus, it can increase ROA
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Analysis of Marriott Corporation’s ‘Project Chariot’ Introduction In the spring of 1992, J.W. Marriott Jr., Marriott Corporation’s Chairman and CEO, must decide whether to recommend a proposal to the Board of Directors for a complete restructuring of the firm due to financial distress and a hefty current debt burden. While restructuring seems promising to executives, there are serious ethical considerations at hand regarding the fiduciary duty of management to both shareholders and debtholders
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Management Graduate Business Administration 645 CRN: 11046 Building 163 – Room 2032 Winter Quarter 2013 Wednesday: 6:00-8:50 Paul Sarmas www.csupomona.edu/~psarmas CATALOG DESCRIPTION: A seminar course in finance utilizing comprehensive cases to simulate the role of the financial manager. 3 seminar-discussion. Prerequisite: GBA 546, all required 500-level courses, and microcomputer proficiency. Concurrent enrollment in GBA 646. Unconditional standing requirement. EXPANDED DESCRIPTION
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