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Marriott

Executive Summary

In 1988, Marriott Corporation intends to undertake investment projects for each of its three business divisions: lodging, restaurants, and contract services. Before Marriott can invest in any particular project, they have to calculate hurdle rates for each division to use as a benchmark to check the viability and profitability of each project. To find these rates, we will use the Capital Asset Pricing Model (CAPM) and the Weighted Average Cost of Capital (WACC). These methods will incorporate past financial history, current financial planning, and industry and market outlook to provide us with the answers we need.

After careful examination of the financial data available, we are able to calculate the CAPM and WACC for not only the Marriott Corporation but also for each division. Our findings give us an overall CAPM of 14.46% and a WACC of 11.19%. For the Lodging division, our CAPM is 22.50% and WACC of 10.67%. Restaurant division has a CAPM of 20.10% and......


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Approximate Word Count: 2106
Approximate Pages: 9 (250 words per double-spaced page)

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