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Marriott Case - r ation N atalia M ar tinez Er ic Schneck 1...

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oration e Natalia Martinez Eric Schneck
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1. Marriott Corporation uses its cost of capital estimate to: evaluate assets for purchase, compare projects to undertake, effectively use debt in their capital structure, and know when to reacquire outstanding shares. Knowing the companies WACC is important. This is used to compare your company against your competitors as well as the government. If Marriott has a low WACC, they can grow easily with minimum cost. The WACC is the appropriate amount that the company requires from new projects or other investments that they can undertake. 2. Marriott Corporation’s weighted average cost of capital is 15.03 %( see Exhibit 1). This cost of capital measures all Marriott divisions, which includes hotels, restaurants, and services. For example, if Marriott were to buy out a competitor with similar divisions, this cost of capital would be an appropriate measure. However, a more accurate estimate for new projects, such as
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