The Cost of Debt (rd)
The cost of debt is the yield-to-maturity on the company’s bonds, which we get from Table A and Table B (Exhibit 2) using the debt rate premium above government added to government interest rates. The debt rate premium is provided for the Marriott and each of its divisions.
The Tax Rate
We can get the income before interest taxes and the income taxes from the case. To find the corporate interest tax rate, we should divide the income taxes by the before interest taxes. Thus, we calculate the tax rate from in 1987 in Exhibit 1, which is 44.10% as the tax rate for the cost of debt.
The Cost of Equity (re)
In order to get the Cost of Equity, we will use the CAMP, which is E (Ri) = Risk-free rate + βe*Risk premium rate. So we need to get the value of risk-free rate, risk premium rate as well as the Beta.
Cite this page
What is the Weighted Average Cost of Capital for Marriott Corporation?. (2016, Oct 19). Retrieved from https://studymoose.com/what-is-the-weighted-average-cost-of-capital-for-marriott-corporation-essay
Popular Posts:
- 1. how to plot a course fugawii on ipad
- 2. where do i find course modules in moodle
- 3. how to refresh cisco course
- 4. what applications does marine nets corporals course need to runrun?
- 5. college professor who just teaches an occasional course
- 6. how do i know if a course is a pass fail course middlebury
- 7. what course of action should be taken if a home nurse neglects or abuses a patients
- 8. 7. which course must first-time drivers in florida take to be eligible for their learner license?
- 9. how many birthdays does the average woman have over the course of her lifetime?
- 10. crash course #30 why did america decide to declare war on germany?