Marriot Corporation Lodging Restaurant Contract Services

Levered Beta 1.11

Actual D/V 41%
Actual D/E 69%
Unlevered Beta (with Tax) 0.80 0.55 1.01 1.27
Target D/V 60% 74% 42% 40%
Target D/E 150% 285% 72% 67%
Target Levered Beta 1.47 1.42 1.42 1.74
Rf 8.95% 8.95% 8.72% 8.72%
RPM 7.43% 7.43% 7.43% 7.43%
Re 19.87% 19.52% 19.24% 21.64%
Rf for debt 8.95% 8.95% 8.72% 8.72%
Debt Premium 1.30% 1.10% 1.80% 1.40%
Rd 10.25% 10.05% 10.52% 10.12%
WACC 11.39% 9.24% 13.63% 15.25%
Unlevered Cost of Capital 14.89% 13.03% 16.20% 18.13%

Lodging
Return Equity BeMarket LeverD/E
Hilton 0.76 14% 16%
Holiday 1.35 79% 376%
La Quinta 0.89 69% 223%
Ramada 1.36 65% 186%
Average

Restuarants
Return Equity BeMarket LeverD/E
CFC 1.45 4% 4%
CFI 1.45 10% 11%
FR 0.57 6% 6%
LC 0.76 1% 1%
McD 0.94 23% 30%
Wendy 1.32 21% 27%
Average
 Asset Value % Asset Beta
Lodging 2777.4 61% 0.55
Contract Services 1237.7 27% 1.27
Restuarants 567.6 12% 1.01
Marriot 4582.7 100% 0.80

Long Term US bond returns 4.58%

S&P 500 returns 12.01%
Risk Premium 7.43%

Corporate Tax Rate 44%

Unlevered Beta
0.70
0.43
0.40
0.67
0.55

Unlevered Beta
1.42
1.37
0.55
0.76
0.81
1.15
1.01