Marriott Corporation: The Cost of Capital
Prof. Q. Ma, FINA 480 Financial Management Applications
(Due: 4:59 pm Monday April 10, 2017)
With this case we find the cost of capital for a company as a whole and for its
divisions. Think of your
Up Movement per period
Down Movement per period
Risk Free Rate per period
Number of years
Number of months
number of months per period
movements per period
More Key Terms
o Options: A contract that gives the owner of
the option the right but not the obligation to
buy or sell an asset.
o Writer: The investor that sells the contract.
o Strike or Exercise price: The predetermined
Bond Pricing and Yields
Bond: A security that obligates
the issuer to make specified
payment to the holder of a
period of time.
Coupon Payment: the regular
cash payments of a bond.
Futures Markets and
Forward Contract: An Arrangement calling for future delivery of an
assets at an agreed-upon price.
Example: Flower Food (makers of Wonder bread) needs to buy 10,000
bushels of wheat on J