Marriott Intl - WACC Analysis

Marriott Intl (Weighted Average Cost of Capital (WACC) Analysis)



Helpful Information for Marriott Intl's Analysis

What is the WACC Formula? Analyst use the WACC Discount Rate (weighted average cost of capital) to determine Marriott Intl's investment risk. WACC Formula = Cost of Equity (CAPM) * Common Equity + (Cost of Debt) * Total Debt. The result of this calculation is an essential input for the discounted cash flow (DCF) analysis for Marriott Intl. Value Investing Importance? This method is widely used by investment professionals to determine the correct price for investments in Marriott Intl before they make value investing decisions. This WACC analysis is used in Marriott Intl's discounted cash flow (DCF) valuation and see how the WACC calculation affect's Marriott Intl's company valuation.

WACC Analysis Information

1. The WACC (discount rate) calculation for Marriott Intl uses comparable companies to produce a single WACC (discount rate). An industry average WACC (discount rate) is the most accurate for Marriott Intl over the long term. If there are any short-term differences between the industry WACC and Marriott Intl's WACC (discount rate), then Marriott Intl is more likely to revert to the industry WACC (discount rate) over the long term.

2. The WACC calculation uses the higher of Marriott Intl's WACC or the risk free rate, because no investment can have a cost of capital that is better than risk free. This situation may occur if the beta is negative and Marriott Intl uses a significant proportion of equity capital.