Posted: September 13th, 2017

Marriott Cost of Capital

Paper, Order, or Assignment Requirements

I will attach the case and the file for instructions. The case assignment should be no more than two pages. But the most important part is the exhibits parts and calculation will be graded more heavily. The instruction file will be specific let me know if something is not clear.

Marriott Corporation: The Cost of Capital

This is a very different sort of case. First, everyone must turn in this case. Second, you will be graded more heavily on your exhibits. I want you to assume that you work for a consulting firm hired by Dan Cohrs. He has asked you to provide the following:

1. A weighted average cost of capital for Marriott as a whole because they are increasing the amount of debt in their capital structure.

2. A weighted average cost of capital for the hotel division using Hilton Hotels as your proxy beta.

3. A weighted average cost of capital for the restaurant division using McDonalds as your proxy  beta.

4. In addition he wants you to be thorough and clear in your analysis. Be sure to show how you lever and unlever betas. Make sure  you provide exhibits for each of the steps above.

5. Carefully explain how you developed your weighted average for each division. This would make up the main body of your write-up .Explain why you did what you did.

6. Comment on the types of mistakes firms make who fail to develop divisional hurdle rates.

You are limited to two pages for this case although there is no limit on the number of exhibits. Remember you will be graded on your paper’s clarity, diction, grammar, punctuation and spelling. Be sure to proof your paper.