Beruflich Dokumente
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CORPORATION:
The Cost of
Capital
Company Background
Elements of Financial
Strategy
Company Goals
Problem Statement
Objectives
Debt ratio =
CAPM
has been used to calculate the cost of
equity
= + ()
Cost of debt
() = +
Fraction of debt
Long Term
Fixed
(8.95%)
Marriot
40
60
7.72
1.30
9.02
Lodging
50
50
7.93
1.10
9.03
Short Term
Restaurants
Contract
Services
Fixed
(8.72%)
25
75
7.36
1.80
9.16
40
60
7.63
1.40
9.03
Marriot
Estimation
= ( 1+ (1-T) )
L1
1.11
Tax
0.4368
D/E
41/59
u
0.8
L2
1.48
Hotels
Hilton Hotel Corp.
0.76
0.4368
14/86
0.7
Holiday Corp.
1.35
0.4368
79/21
0.43
0.89
0.4368
69/31
0.39
1.36
0.4368
65/35
0.66
Total
2.18
Avg
0.55
Restaurants
Church's Fried Chicken
Collins Foods
International
1.45
0.4368
4/96
1.42
1.45
0.4368
10/90
1.36
Frisch's Restaurants
0.57
0.4368
6/94
0.55
1.43
Ratio
2777.40
0.62
0.55
467.60
0.10
1.01
Contract Services
1237.70
0.28
Marriot
4482.70
Divisions
Lodging
Restaurants
= +
0.80
= 1.28
0.80
Cost of Equity
CAPM method
= + ()
Divisions
kmrp
(%)
ke
(%)
krf (%)
L2
Marriot
8.95
1.48
7.43 19.94
Lodging
8.95
1.43
7.43 19.57
Restaurants
Contract
Services
8.72
1.42
8.47 20.98
8.72
1.76
8.47 23.86
WACC
WACC = (1-T) +
T = 0.4368
Divisions
wd
kd
we
ke
WACC
(%)
Marriot
60
0.0902
40
0.1994
11.02
Lodging
74
0.0903
26
0.1957
8.85
Restaurants
Contract
Services
42
0.0916
58
0.2098
14.34
40
0.0903
60
0.2386
16.35
WACC
18
16.35
16
14.34
14
12
11.02
10
8.85
8
6
4
2
0
Marriot
Lodging
Restaurants
WACC (%)
Contract Services
Conclusion
Conclusion