Case 1 -- Marriott [Questions]

Edontworry

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Unformatted text preview: current government rates) already reflects any adjustment for the presence of floating rate debt (i.e., don’t worry about the presence of floating rate debt in your report). Your report should clearly show the cost of capital that you would recommend for Marriott as a whole, and for each of its three divisions. To properly use WACC as a measure for the overall cost of capital, you need to consider the following issues. 1. Market risk premium: How long of an estimation window (i.e. how far back in history should you go to calculate it)? Should the risk premium be relative to T‐bills (maturities of one year or less) or T‐bonds (maturities of ten ye...
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