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 six
Premium Finance Stock Marriott International
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
Premium Arithmetic mean Weighted average cost of capital Average
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
Premium Weighted average cost of capital Debt
and macro environmental factors 1.2 Compare and contrast a minimum of two tools such as SWOT and POWER SWOT and apply to business solutions 1.3 Critically contrast Primary and Secondary research methods 2.1 Evaluate the use of tools such as Boston and Ansoff Matrix to business situations 2.2 Analyse the effectiveness of models such as Porter’s Generic Strategies 3.1 Evaluate consumer buying behaviour and the adoption process 3.2 Analyse the role of marketing mix to specific products 3.3 Evaluate the
Premium Marketing
Executive Summary The case‚ Marriott Corporation: The Cost of Capital (Abridged)‚ concentrates on making decisions based on capital asset pricing model (CAPM) and the weighted average cost of capital (WACC) to measure the opportunity cost for investments. Dan Cohrs‚ the Vice President of Finance of Marriott Corporation‚ had to deal with making recommendations for the hurdle rates at Marriott Corporation and its three divisions which are lodging‚ restaurant and contract services. In calculating
Premium Weighted average cost of capital Finance
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‚
Premium Weighted average cost of capital Marriott International
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
Premium Weighted average cost of capital Marriott International Restaurant
Shipments 4Q12 Market Share 4Q11 Shipments 4Q11 Market Share 4Q12/4Q11 Growth HP 15‚023 16.7% 15‚113 15.8% -0.6% Lenovo 14‚105 15.7% 13‚040 13.6% 8.2% Dell 9‚482 10.6% 11‚967 12.5% -20.8% Acer Group 6‚959 7.8% 9‚692 10.1% -28.2% ASUS 6‚467 7.2% 6‚126 6.4% 5.6% Others 37‚753 42.0% 39‚974 41.7% -5.6% All Vendors 89‚789 100.0% 95‚913 100.0% -6.4% Source: IDC Worldwide Quarterly PC Tracker‚ January 10‚ 2013
Premium Netbook Apple Inc. Mobile phone
the reader with a clearly defined ethical problem. This should be no more than 1000 words. (30%) The Huron Consulting Group (“Huron” or “Company”)‚ global management consulting company offering services in the Healthcare‚ Education‚ Law‚ and Finance industries was formed in 2002‚ by a core group of experienced financial and operational consultants‚ with equity sponsorship from a group of investors led by Lake Capital Management LLC. Its headquarters is situated in Chicago‚ Illinois and listed
Premium Enron Ethics Arthur Andersen
Case 1- Marriott Corporation: The Cost of Capital Some preliminary questions: 1. What do you think about Marriott’s policy of repurchasing shares? Repurchase whenever stock price < warranted equity value Does this mean the market is inefficient? 2. Why does Marriott manage rather than own hotel assets? Finding limited partners on a hotel project is equivalent to selling private equity in the project Is there any reason to
Premium Hotel Economics Generally Accepted Accounting Principles