MEMO To:Dan Cohrs Vice President of Project pay From:Finance Consultants take aim of Management Boston University Date:February 1, 2012 ------------------------------------------------- Re: Recommendations for Annual Hurdle regularise Adjustments When expression at the vault judge our team has deduced that utilise one hurdle footstep for the entire Marriott Corporation is an death penalty to be apply with caution and only executed when looking at commit in an all-inclusive type of investment, such as a resort that consists of all segments: lodging, restaurants, and contracts. However, when investing in projects tailored to Marriotts person lines of business we recommend use the specific hurdle rates we calculated as abide be seen in exhibit XX. Using these hurdle rates will break away Marriott a more accurate moving picture of the venture they face from various investment projects, enabling Marriott to act upon strategic investment decisions an d not passing up whatsoever opportunities.
For the individual business segments that Marriott operates in, for example lodging, we further dissected the WACC enumerations to rule a more accurate hurdle rate for each(prenominal) line of business. We did this by looking at betas for companies within an labor (ex. Lodging labor companies such as Ramada, La Quinta, etc.), and unlevering them so that they were irrespective of their uncomparable great structures. We then averaged all of the unlevered betas and relevered it to Marriotts Lodging capital structure. Applying this restructured beta to our CAPM calculations p rovided for a much more accurate WACC calcul! ation for the specific industries Marriott operates in. (ADD IN OTHER straggle OF THE BETA CALCULATIONS)If you pauperism to get a full essay, stage it on our website:
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