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Marriott Corporation: The Cost of Capital
Cost of Debt
Risk free rate - Yield on 30-years US T-bonds 8.95%
Credit spread - Premium for Credit Risk 1.30%
10.25%
WACC 11.68%
Marriott Corporation: The Cost of Capital
Cost of Debt
Risk free rate - Yield on 30-years US T-bonds 8.95%
Credit spread - Premium for Credit Risk 1.10%
10.05%
WACC 9.54%
Marriott Corporation: The Cost of Capital
Cost of Debt
Risk free rate - Yield on 10-years US T-bonds 8.72%
Credit spread - Premium for Credit Risk 1.80%
10.52%
WACC 13.90%
Marriott Corporation: The Cost of Capital
Cost of Debt
Risk free rate - Yield on 10-years US T-bonds 8.72%
Credit spread - Premium for Credit Risk 1.40%
10.12%
WACC 14.62%
Marriott Corporation: The Cost of Capital
10.12%
20.31%
14.62%
Amazon, Inc. $1.25 billion Convertible Bonds Issue in 1999
Coupon 4.75%
Credit Rating CCC+
Par Value 1000
Issued at discount 980
Interest Rate on
Plain Vanila Debt
for comparable
credit rating firm 11% Debt Component $626.55
Cash Flows Equity Component $353.45
1/1/1999 -980
6/30/1999 23.75
12/31/1999 23.75
6/30/2000 23.75
12/31/2000 23.75
6/30/2001 23.75
12/31/2001 23.75
6/30/2002 23.75
12/31/2002 23.75
6/30/2003 23.75
12/31/2003 23.75
6/30/2004 23.75
12/31/2004 23.75
6/30/2005 23.75
12/31/2005 23.75
6/30/2006 23.75
12/31/2006 23.75
6/30/2007 23.75
12/31/2007 23.75
6/30/2008 23.75
12/31/2008 1023.75