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
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consumer lending‚ a major part of the asset side of banking‚ is all flowing toward national consolidators like Capital One. -RICHARD D. FAIRBANK‚ CEO AND CHAIRMAN‚ CAPITAL ONE FINANCIAL CORPORATION ’ United Kingdom‚ the Hfs Group‚ to strengthen its Global Financial services (GFS) subsidiary in the British market. As of April 2005‚ it possessed sufficient liquidity ($21 billion) and capital ($9.2 billion)4 to enable its famous brand to expand into new markets and seize the right opportunities for
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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
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Nike Inc. held an analysts’ meeting to share their 2001 fiscal results and develop a strategy to revitalize the company. II. Background of Firm Nike’s revenues since 1997 had grown from $9 billion‚ while net income had fallen $220 million. A study written by Douglas Robson printed in Business Week revealed that Nike’s market share in the U.S. athletic shoe industry had fallen from 48 percent to 42 percent since 1997. In addition‚ supply-chain issues and the effects of a strong dollar negatively
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Capital One Case Study Read the Capital One Case materials. 1. What is Capital One’s business and who are their competitors? Capital One’s business deals with a bank financial servicing company. They specialize specifically in banking‚ credit cards‚ home loans‚ auto loans and savings products. Capital One was founded by Richard Fairbank and Nigel Morris in 1988. Fairbank highly focused on the marketing and customization of credit card use and information. The company is very analytical
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Cost of Equity: For the risk-free rate‚ we decided to use the 30-year old Treasury yield‚ which is currently 4.6%. We believe it is important to match the time horizon when comparing financial assets. Given that stocks have essentially an endless time horizon‚ the 30-year Treasury seems a more reasonable asset by which to compare stocks. 1-month Treasury Bills‚ for instance‚ are comparable to safety-deposit boxes‚ which are completely safe‚ but cannot ever yield a return. It’s highly likely that
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[pic] EnCana Corporation -Cost of Capital Nabil Naouli Yong Peng Ahmed Alenazi Raj Kancharapu Table of Contents 1. Introduction 2 2. History 2 a. Top Competitors 4 b. Major Product and Services 5 c. SWOT Analysis 5 3. Calculating Cost of Capital 6 a. Calculating Cost of Equity 7 i. Risk free rate 7 ii. Market Risk Premium 8 iii. Beta 8 b. Calculating Cost of Debt 9 c. Weighted Average Cost of Capital ( WACC ) 10 d. WACC- EnCana Corp. 2010 12 4. Discussion
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OPPORTUNITY COST & THE FREE MARKET Scarcity is one of the most basic and crucial points to understand in microeconomics.1Scarcity means that we cannot have all the needs and wants to satisfy our desires. Scarcity can be applied to almost anything. Due to the scarcity of products we must make a choice of what we want. We must choose whether to do one thing or another by what we value to be most important to us. This‚ therefore‚ leads to us opportunity cost. Usually when one has to make a decision
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home improvement retailer. They are now the second largest retailer in the United States‚ offering 40‚000 to 50‚000 different types of home improvement supplies‚ building materials‚ and lawn and garden products. They carry a wide assortment of low-cost products‚ and offer expert advice and exceptional customer service. As an innovator of the home improvement industry‚ Home Depot has expanded into Canada‚ Mexico‚ Argentina‚ Chile‚ and Puerto Rico. Currently there are 1‚459 stores including fifty
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statements‚ so costs affect net profit of the company. In deciding whether to lease or purchase of the machine it is necessary to learn what each option‚ and the cash flows of the parameters to select will give the highest return of investment-related cash flow. Net present value (NPV) is used to decide whether to buy or lease of machines‚ and represents the cash flow associated with each option’s spreadsheet model to help. Here is the information considered by the management of the machine. Cost of machine:
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