marrott1(编辑修改稿)

marrott1(编辑修改稿)内容摘要：

te have higher beta, and rpre is from spread between Samp。 P 500 posite returns and longterm . government bond returns in exhibit 5 = . I assume shortterm return rate for rpre because Marriott should use shortterm rate for the restaurants which is quite mediumperiod investment in this financial risk rate. 5. (E/V) or the market value of the equity/the value of the firm is from 1 debt percentage in capital for restaurants from table A. Conclusion and Concerns: In analyzing hurdle rate when considering investing in order to optimize the outes, except total WACC of Marriot Corporation, the pany should consider WACC for each division because varied conditions will affect and make a difference to the rates, and different rates in each business line will help Marriott Corporation decide to invest in the right project more profitably and accurately in order to increase profitability for its shareholders’ value. There are many concerns that are important to consider as significant factors in calculating the hurdle rate for investing in projects. The first significant consideration is different risk in each section of business line. Due to having many types of risk to consider the hurdle rate, Marriott has to choose the suitable risk for each investment. Period of investment will have effect on interest rates that the pany will pick such as investment as a longterm project or shortterm investment. Second, sometimes the firm cannot predict the exact value of the future rate which it should apply to projects in order to achieve the expected return for investment that is why the pany has to use estimated value from the previous information such as interest rate or average tax rates in the past. Moreover, for estimating appropriate betas, there are many aspects that will help the pany pick the better beta for calculating WACC. To start with size of firms, some evidence shows that smaller firms with higher beta value tend to have higher return than larger firms. Next, due to relationship of Beta and financial risk, the firm which has higher market leverage value than others with the same other conditions such as size of a pany will have possibility to be higher in Beta value because it obtains higher risk in its operations. Finally, if the pany succeeds in bining important perspectives appropriately by using enough base information from the past, carefully analyzing the future trend in financial rates, and deliberating separate financial factors in each business line for having more visions to the firm in order to invest for optimization of return, the firm will get important support information to decide appropriate investments in the projects which will make significant return to the corporation. Marriott’s corporation: the cost of capital What is the weighted average cost of capital for Marriott Corporation? Are the four ponents of Marriott’s financial strategy consistent with its growth objective? Marriott Corporation is an international pany who’s the growth over the year has been more than satisfactory. In 1987, Marriott’s sales grew up by 24% and its return on equity stood at 22%. Moreover the sales and earnings pr share has doubled over the previous year. The pany operates in three divisions: lodging, contract services and restaurants which represents 41%, 46% and 13% of sales in 1987 respectively. Marriott is determined to develop and to enhance its position in each division. This main goal contains 3 others more detailed ponents: To bee the most profitable pany. To be the preferred employer. To be the preferred provider. In order to achieve its goal, the managers of Marriott have developed a financial strategy with 4 main decisions. Manage rather than own hotel assets. The first measure is simply to be more involved in the management of theirs hotel. It means for the pany to have more control on how the money is used but also to have more responsibilities concerning the employees and especially the customers. The pany is able to monitor and control its resources and expenses. By having more control, Marriott can try to improve its efficiency and its profitability, for example, by searching the best suppliers with long term contracts for what the pany really needs and it could decrease useless expenses. There is another benefit if Marriott performs well on increasing its profit。 Marriott will be able on the one hand to increase the salary of their employees and on the other hand to improve the quality of services provided to the customers. Invest in projects that increase shareholders values This object is one of the financial goals to invest properly. Marriott used discounted cash flow techniques to evaluate potential investment. It is beneficial because it is considered present time value. Projects which increase shareholder value could be formed with benchmark hurdle rates, the pany can ensure a return on projects which results in profitable and petitive advantage. Optimize the use of debt in the capital structure. Marriott invests a lot of money in long term assets that’s why it is really necessary for the pany to maximize and optimize its debt. And the pany has an A rating. It means that Marriott is able to borrow an important amount of money to invest and it could be heavily indebted. Therefore, it is really important to optimize the debt level. Repurchased undervalued shares. This could not only reinvest money back into the corporation but also have a high potential for future profits. The corporation calculates a 171。 warranted equity value 187。 to deal with its mon shares instead of taking into consideration the daytoday market price. By proceeding this way, it gives Marriott the possibility to get an important amount of money that could be reinvested.。