Compute the WACC of Marriott’s restaurant division in Example 13.15 by doing the following:

a. Compute the
E of Marriott’s restaurant division using equation (13.6).

b. Apply the CAPM’s risk expected return equation to obtain the restaurant , assuming a risk-free rate of 4 percent and a market risk premium of 8.4 percent.

c. Estimate the WACC, using equation (13.8).

d. Compare this WACC to the WACC in Example 13.15. If they are not the same, you made a mistake.

AppendixLO1