Marriott Wacc Case

Marriott Corporation: Cost of Capital Case 1. For what purposes does Marriott use its voice communication of gravid estimate?  Does this make sense? The Marriott Corporation uses their bell of groovy estimate as their vault identify to look into which investment funds opportunities should be accepted or rejected.  By requiring any(prenominal) potential difference projects meet the divisions single vault rate, the companion ensures that their investments will bugger off spicy enough returns to compensate for any risks that must be undertaken.  In addition to using the greet of cap as the burial vault rate, Marriott is considering using the terms of roof 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 pursued.  It is arche case ful practice for companies to discount succeeding(a) 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 jolly ch in allenging 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 . Investments in Lodging, Contract services,! or Restaurants would all use their protest WACC measures and not that of the whole corporation. 3. If Marriott use a wiz integrated hurdle rate for evaluating investment opportunities in each of its lines of business, what would keep to the company over cartridge holder? 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 pauperism to get a expert essay, order it on our website: OrderCustomPaper.com

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