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Assignment -2
Marriott Corporation – The Cost of
Capital
Faculty: Prof. Abhilash S Nair
Submitted By:
Arshdeep Singh
Amit Kumar
Ashish Dennis Dean
Vimal Mohan Jain
Calculating WACC for Marriot
Marriot has three divisions :
Lodging
Restaurant
Contract services
Financial Strategy of Marriott
Manage rather than own hotel assets
Invest in projects that increase shareholder
value
Optimize the use of debt in the capital
structure
Repurchase undervalued sharesunlevered
Unlevered Asset Beta
Asset beta = (E/V) * Equity beta
βM
A = ( V /
L MV ) * β L + (V / V ) * βR + (V / V ) * βCS
A R M A CS M A
Asset Beta for Contract Services
Division
So,
0.57=909.7/1735.2*0.38+452.2/1735.2*
0.61+373.3/1735.2*Asset beta (CS)
Lodging – 10.06%
Restaurant – 12.50%
Contract services – 15.38%