Executive Summary We found the weighted average cost of capital for Marriott as a whole to be 9.68%. The divisions of Lodging‚ Contract Services and Restaurants had WACCs of 8.14%‚ 13.33%‚ and 9.63% respectively. The only variable between these divisions that remains consistent is the tax rate. Marriott has a target rate for each of the divisions’ capital structures‚ which affects their debt and equity betas. Also‚ there are stark differences between the betas in the segments‚ as well as the
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Análisis Caso Marriott Corporation: Costo de Capital En el caso se plantea que Marriott utiliza cuatro elementos en su Estrategia Financiera las cuales apuntan a un crecimiento objetivo. Por lo que‚ se pregunta‚ ¿Son consistentes estos elementos con su crecimiento objetivo?‚ y para ello se realiza el siguiente análisis. I. Análisis de los Elementos de Estrategia Financiera: Primero debemos identificar que el alto crecimiento que busca Marriott es igual a maximizar el valor de la empresa y para
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Marriott corporation Group -1 Akasha.J Dhivya Priya.R Gayathri.P.A Sadhana.S Srikumaran.M.A Components of Marriott’s Financial Strategy Growth Objective: Is to become the preferred employer and provider in lodging‚ contract services and restaurants‚ and to be the most profitable company in the industry. 1. Manage rather than own hotel assets: Lowers accounting assets on the books thereby increasing the ROA. Sharing of risk that comes from the properties and provide Marriott to operate with
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QUESTION 1 Are the four components of Marriott´s financial strategy consistent with its growth objective? With regards to the overall strategy of primarily being a premier growth company‚ we analyze the 4 components as follows: 1. Manage rather than own hotel assets • Marriott developed the projects‚ established long term management contracts consisting of 3% of revenues and 20% of the profits. The assets were then sold to partners. Not owning hotels provided Marriot with greater liquidity
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What would you do if you won $500‚000? If you won $500‚000 in the lottery‚ what would you spend it on? There are a lot of different ways that people would choose to spend this money. Some people would choose to spend it on themselves‚ others would choose to give it all away to charity. The way I would spend it would be a mixture of the two. (67) First‚ I would take $250‚000 and put it in the bank. If it is in the bank for a while‚ it will draw around four to five thousand dollars in interest
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Employee Loyalty Yes Yes Yes Yes Sustained Competitive Advantage Strength and Sustainable Distinctive Competence Marriott has a few distinctive competencies that are the driving force in their company. Superior efficiency is evident in their personnel. Marriott has been named by Fortune Magazine as on of the "100 Best Companies to Work For" and one of the "Top 50 Companies for Minorities" (Marriott is‚ 2004). They are also very concerned with minimizing employee turnover because of the high costs associated
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American Chemical Corporation Cost of Capital : Collinsville Investment [pic] Where: Re = cost of equity Rd = cost of debt E = market value of the firm’s equity D = market value of the firm’s debt V = E + D Tc = corporate tax rate D/V and E/V Ratio: Since the target debt ratio of Dixon is given to be about 35%‚ we assume the target D/V ratio for Colinsville investment to be the same. Hence the E/V ratio = 1 ’ D/V = 65%. Given the
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Marriott Corporation Abstract Marriott Corporation has three divisions – lodging‚ contract services and restaurants – with dissimilar operations. The company uses three separate hurdle rates for the three divisions to value the proposed projects. It is believed that this strategy is more appropriate that using a single firm-wide discount rate because the operations of the three divisions differ drastically. However‚ the company has to ensure that the company uses an appropriate discount rate for
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Marriott Corporation: The Cost of Capital (Abridged) General Approach The company is split into 3 divisions Lodging‚ Contract Services and Restaurants. The WACC for each of the 3 divisions and then subsequently the entire corporation’s WACC need to be calculated. This will be done through calculating the WACC for each of the 3 divisions and then taking a weighted average of these 3 divisional WACC numbers to get the overall Marriott Corporation WACC. 1. Calculating the Beta a
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What Would You Do If You Won the Lottery If I won the lottery‚ the first thing I would do is go to my bank and put the money in my savings and invest it. Then I could add to it and be even‚ more rich. One thing I wouldn’t do is tell somebody‚ because they would tell somebody‚ then everyone would want my money. After I would have put it in the bank‚ I would spend some of it on a white‚ GTI Volk’s Wagon. German engineering‚ you can’t beat it. I think and dream about this car. I would
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