Sheet1

Marriott Cost of Capital Lodging Division

Tax Rate

0.44
Equity Beta
D/D+S

Lodging
Hilton
Holiday
La Quinta
Ramada
Average

0.76
1.35
0.89
1.36
1.09

14%
79%
69%
65%
0.5675

S/D+S
86%
21%
31%
35%
0.4325

D/S

Unlevered Beta
0.16
3.76
2.23
1.86
2.00

0.65
0.28
0.28
0.48
0.42

Target D/D+S
Target D/S Levered Beta
74%
2.85
1.62

Costs of Equity:
Rf
Lodging

MRP
8.95%

Beta
7.43%

Requity
1.62 21.02%

Costs of Debt:
Rf
Lodging

8.95%

Spread
Tax rate Rdebt(1-T)
1.10%
0.44 0.0563

WACCs:
Lodging

Target D/D+S Rdebt(1-T) S/D+S Requity WACC

74%
0.0563
26% 21.02%
9.63%

Page 1

Sales Weighted Levered Beta

1.56

Sheet2

Hilton
Holiday
La Quinta
Ramada
Average Beta
Average Sales
Weighted Beta

Church's
Collins
Frisch's
Luby's
McDonalds
Wendys
Average Beta
Average Sales
Weighted Beta

Equity Beta B/B+S

0.88
1.46
0.38
0.95
0.92

Lodging
B/S
14%
79%
69%
65%

0.16
3.76
2.23
1.86

1.16

0.41

Equity Beta B/B+S

0.75
0.60
0.13
0.64
1.00
1.08
0.70

Restaurants
B/S
4%
10%
6%
1%
23%
21%

0.04
0.11
0.06
0.01
0.30
0.27

0.89

Assets
Lodging
2777.4
Restaurants
567.6
Contract Services
1237.7
Marriott
4582.7

Unlevered Beta
0.76
0.31
0.12
0.33
0.38

Unlevered Beta
0.72
0.54
0.12
0.63
0.77
0.85
0.61
0.70

Contract Services
Assets %
Unlevered Betas
0.61
0.41
0.12
0.70
0.27
0.88
1.00
0.57

Page 2

Sheet2

Sales (87)
0.77
1.66
0.17
0.75

Sales (87)
0.39
0.57
0.14
0.23
4.89
1.05

Page 3