Marriott Wacc Case

Marriott Corporation: Cost of Capital Case 1. For what purposes does Marriott use its orchest point of gravid estimate?  Does this make sense? The Marriott Corporation uses their woo of groovy estimate as their vault rate to learn which enthronement funds opportunities should be accepted or rejected.  By requiring any(prenominal) potential difference projects meet the divisions several(prenominal) vault rate, the companion ensures that their investments will bugger off uplifted enough returns to compensate for any risks that must be undertaken.  In addition to using the bell of cap as the overleap rate, Marriott is considering using the make up of capital of the United States to determine inventive compensation.  In other words, it was proposed that employees receive bonuses ground on their divisions return on assets compared to the hurdle rate. It is appropriate to use the cost of capital as a hurdle rate in determining which projects should be pursu ed.  It is arche fictitious character practice for companies to discount future cash flows at a predetermined discount rate to determine whether or not the company will be profitable. However, using performance compared to hurdle rates would be clean ch eachenging in that managers would have an incentive to underestimate a projects align cost of capital in order to consistently stun their estimates.   2.

What is the weighted average cost of capital for Marriott Corporation as a whole?  What type of investments would you value using this WACC? This WACC eyeshade is the opportunity cost of capital for the Marriott Corporation as a whole. Invest! ments in Lodging, Contract services, or Restaurants would all use their protest WACC measures and not that of the whole corporation. 3. If Marriott utilize a wiz integrated hurdle rate for evaluating investment opportunities in each of its lines of business, what would keep to the company over age? If Marriott used a single hurdle rate for all lines of business, they would ignore the importance of coordinated required returns with risk levels across...If you indispensableness to get a expert essay, order it on our website: BestEssayCheap.com

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