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Executive Summary:

Marriott Corporation is determining the weighted average cost of capital (WACC) to use as the hurdle rates for future projects and compensation. In determining this, there is both a portfolio rate (which includes all divisions) and rates for each individual division. These divisions are split into different categories rather than using only a single rate for Marriott because the levels of risk vary from division to division. Although there is a determinable risk rate for Marriot as a whole, Marriott should use the separate divisional rates when determining possible future projects and employee compensation. In evaluating Marriot and the market, the WACC for all four is as follows:

Marriott 8.11%
Lodging 7.02%
Contract Services 8.21%
Restaurant 9.10%

Findings and Analysis

WACC Summary

WACC (the hurdle rate or required rate) is extremely important for business operations and future projects. Poor decisions will be made if the wrong WACC is......

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Approximate Word Count: 841
Approximate Pages: 4 (250 words per double-spaced page)

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