Marriott Corporation: The Cost of Capital Simrith Sidhu, Amy-Jane Miocevich, Jacques Rousset, Jing Tao Task One: Marriott uses the Weighted Average Cost of Capital (WACC) to measure the opportunity cost for investments. WACC is calculated using the 1987 financial data provided in the Marriot Corporation: The Cost of Capital (Abridged) case study and estimators. WACC = Cost of Equity x (Equity/Debt +Equity) + Cost of Debt x (Debt/(Debt + Equity)) x (1 – Tax Rate) This method is applied for
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
Marriott 's corporation: the cost of capital What is the weighted average cost of capital for Marriott Corporation? Are the four components of Marriott 's financial strategy consistent with its growth objective? Marriott Corporation is an international company who 's the growth over the year has been more than satisfactory. In 1987, Marriott 's sales grew up by 24% and its return on equity stood at 22%. Moreover the sales and earnings pr share has doubled over the previous year. The
Financial Decision 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
FBE 421 Marriott Corporation ------------------------------------------------- Introduction Founded in 1927, Marriott Corporation has become one of the leading food service companies in the United States. As of 1987, Marriott recorded a profit of $233 million on sales of $6.5 billion and retained a high sales growth rate of 24%. Marriott runs on three major lines of business lodging, contract services, and restaurants. Lodging division which includes 361 hotels generated 41% of 1987 sales
Financial Decision Analysis~Marriott Corporation Case Study Executive Summary – Q5 – Hurdle Rate Analysis Hurdle rates, the weighted cost of capital that projected cash flows must exceed for initiatives to be considered, vary within Marriott Corporations due to their unique industry risk levels and capital structures. They use this number to determine which projects to accept, to adjust the rate at which the firm grows and as a measure for compensation within each business area, and as incentive
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
Marriott's sales grew up by 24% and its return on equity stood at 22% in the year 1987, the sales and earnings per share has doubled over the previous year as stated in the case study. The company operates in three divisions: lodging, contract services and restaurants which represents 41%, 46% and 13% of sales in 1987 respectively. Marriott is determined to develop and to enhance its position in each division and remain a premier growth company as stated in the annual report (1987). This key objective implies
Instructor Guide CORPORATE FINANCE COURSE NUMBER: MBA591 [pic] Jones International University®, Ltd. 1.800.811.JONES (5663) http://www.jonesinternational.edu ©2008 Jones International University®, Ltd. All rights reserved. 9697 East Mineral Avenue, Englewood, Colorado 80112, USA This workbook and all accompanying audio-visual material, manuals and software (collectively, the "Materials") are copyrighted with all rights reserved. Under the copyright
business financially Seeking out and implementing appropriate investments Managing cash flows The bottom line is creating value for the firm or organization. MBA 591 builds on financial concepts learned in the core finance course and will examine case studies and business scenarios using an "applied" approach. The overall goal of this course is to provide graduate-level students with a more in-depth understanding of corporate finance that will successfully prepare them for roles as financial