Marriott Cost Of Capital

Marriott cost of capital Objective: 1) Calculate the divisional and the betrothal cost of capital and explain the calculation. 2) Evaluate Marriotts use of beau monde cost-of-capital rate for the individual divisions. Cost of Capital for Lodging incite can be expressed as CC = We*Ce + Wd*Cd. For the weights of debt and equity (We and Wd), the 1988 target-schedule rates of debt-to-assets and debt-to-equity were used as the only measures available in the case. Cost of Equity (Ce) was calculated based on the CAPM formula.

30-year T-bond was used as a long-term risk-free aid to ge t the risk-free rate, since Marriott used the cost of long-term debt for its remain cost-of-capital calculations. The market amplitude 8.47 was the arithmetic-average spread between the S&P 500 returns and the short-term US T-bills between 1926-1987. This market subvention is consistent with the current academic suggestions and it was used in every(prenominal) calculations of this exercise. T...If you penury to get a full essay, order it on our website: BestEssayCheap.com

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