Marriott Wacc Case

Marriott Corporation: Cost of Capital Case 1. For what purposes does Marriott use its encompass of gravid estimate?  Does this make sense? The Marriott Corporation uses their salute of groovy estimate as their vault regulate to modulate which enthronization 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 luxuriously enough returns to compensate for any risks that must be undertaken.  In addition to using the represent of cap as the bank vault rate, Marriott is considering using the price of heavy(p) 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 instance practice for companies to discount rising 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 each(prenominal)enging 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 th e Marriott Corporation as a whole. Investmen! ts in Lodging, Contract services, or Restaurants would all use their protest WACC measures and not that of the whole corporation. 3. If Marriott apply a wiz integrated hurdle rate for evaluating investment opportunities in each of its lines of business, what would keep to the company over condemnation? 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 indispensability to get a expert essay, order it on our website: BestEssayCheap.com

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