Description
workings of Marriott case used in Strategic Financial Management.
KeyWords: Beta, WACC, Cost of Debt, Cost of Equity
Long Term Debt Shares Outstanding Market Price V D/V E/V Unlever Beta Equity Beta Asset Beta Target D/V Target E/V Relever Beta Equity Beta Risk Free Rate Risk Premium Cost of Equity Cost of Debt WACC
2498.80 118.80 30.00 6062.80 41.22 58.78
0.97 0.57 60% 40%
1.43 8.95% 7.43% 19.54% 10.25% 11.88%
Hilton Hotels Corporation Holiday Corporation La Quinta Motor Inns Ramada Inns Beta Total Revenues Target D/V Target E/V Risk Free Rate Risk Premium Relever Beta
Equity Beta D/V 0.88 1.46 0.38 0.95
E/V 14% 79% 69% 65% 86% 21% 31% 35%
Asset Beta Revenues 0.76 0.77 0.31 1.66 0.12 0.17 0.33 0.75 0.38
3.35 74% 26% 8.95% 7.43% 1.46 1.56
Beta Cost of Equity Cost of Debt WACC
1.46 19.76% 10.05% 10.05%
1.56 20.56% 10.05% 10.25%
Revenue Weighted Average Beta 0.17 0.15 0.01 0.07 0.41
Holiday Corporation Ramada Inns Church's Fried Chicken Collins Food International Frisch's Restaurants McDonalds Wendy's International Beta Total Revenues Target D/V Target E/V Risk Free Rate Risk Premium Relever Beta
Equity Beta D/V 1.46 0.95 0.75 0.6 0.13 1 1.08
E/V 79% 65% 4% 10% 6% 23% 21% 21% 35% 96% 90% 94% 77% 79%
Asset Beta Revenues 0.31 1.66 0.33 0.75 0.72 0.39 0.54 0.57 0.12 0.14 0.77 4.89 0.85 1.05 0.52
9.45 42% 58% 8.95% 7.43% 0.90 1.10
Beta Cost of Equity Cost of Debt WACC
0.90 15.62% 8.70% 11.47%
1.10 17.12% 8.70% 12.34%
Revenue Weighted Average Beta 0.05 0.03 0.03 0.03 0.00 0.40 0.09 0.64
Asset Beta Lodging Restaurant Contract Total Identifiable Assets 0.41 0.64 0.90 4582.7
Identifiable Assets 2777.4 567.6 1237.7
Weights 61% 12% 27%
Marriott
0.57
doc_853007386.xls
workings of Marriott case used in Strategic Financial Management.
KeyWords: Beta, WACC, Cost of Debt, Cost of Equity
Long Term Debt Shares Outstanding Market Price V D/V E/V Unlever Beta Equity Beta Asset Beta Target D/V Target E/V Relever Beta Equity Beta Risk Free Rate Risk Premium Cost of Equity Cost of Debt WACC
2498.80 118.80 30.00 6062.80 41.22 58.78
0.97 0.57 60% 40%
1.43 8.95% 7.43% 19.54% 10.25% 11.88%
Hilton Hotels Corporation Holiday Corporation La Quinta Motor Inns Ramada Inns Beta Total Revenues Target D/V Target E/V Risk Free Rate Risk Premium Relever Beta
Equity Beta D/V 0.88 1.46 0.38 0.95
E/V 14% 79% 69% 65% 86% 21% 31% 35%
Asset Beta Revenues 0.76 0.77 0.31 1.66 0.12 0.17 0.33 0.75 0.38
3.35 74% 26% 8.95% 7.43% 1.46 1.56
Beta Cost of Equity Cost of Debt WACC
1.46 19.76% 10.05% 10.05%
1.56 20.56% 10.05% 10.25%
Revenue Weighted Average Beta 0.17 0.15 0.01 0.07 0.41
Holiday Corporation Ramada Inns Church's Fried Chicken Collins Food International Frisch's Restaurants McDonalds Wendy's International Beta Total Revenues Target D/V Target E/V Risk Free Rate Risk Premium Relever Beta
Equity Beta D/V 1.46 0.95 0.75 0.6 0.13 1 1.08
E/V 79% 65% 4% 10% 6% 23% 21% 21% 35% 96% 90% 94% 77% 79%
Asset Beta Revenues 0.31 1.66 0.33 0.75 0.72 0.39 0.54 0.57 0.12 0.14 0.77 4.89 0.85 1.05 0.52
9.45 42% 58% 8.95% 7.43% 0.90 1.10
Beta Cost of Equity Cost of Debt WACC
0.90 15.62% 8.70% 11.47%
1.10 17.12% 8.70% 12.34%
Revenue Weighted Average Beta 0.05 0.03 0.03 0.03 0.00 0.40 0.09 0.64
Asset Beta Lodging Restaurant Contract Total Identifiable Assets 0.41 0.64 0.90 4582.7
Identifiable Assets 2777.4 567.6 1237.7
Weights 61% 12% 27%
Marriott
0.57
doc_853007386.xls