Arithmetic Average

Short$-$Term Treasury Bill Returns

$1926-19873\mathrm{.}54\%$

$1926-19501\mathrm{.}01$

$1951-19753\mathrm{.}67$

$1976-19807\mathrm{.}80$

$1981-198510\mathrm{.}32$

$19866\mathrm{.}16$

$19875\mathrm{.}46$

Long$-$Term U$.$S$.$ Government Bond Returns

$1926-19874\mathrm{.}58\%$

$1926-19504\mathrm{.}14$

$1951-19752\mathrm{.}39$

$1976-19801\mathrm{.}95$

$1981-198517\mathrm{.}85$

$198624\mathrm{.}44$

$1987-2\mathrm{.}69$

Generally, choose a risk$-$free rate that corresponds to the maturity of your assets

$$ Since Marriott has a mix of short$-$term and long$-$term assets, which rate should we choose? Should I use $1$ year, $10$ years, or $30$ years? answer directly

Exhibit $2$ Financial Summary by Business Segment, $1982-1987($millions of dollars$)$

$198219831984198519861987$

Lodging

Sales $$1,091\mathrm{.}7$ $$1,320\mathrm{.}5$ $$1,640\mathrm{.}8$ $$1,898\mathrm{.}4$ $$2,233\mathrm{.}1$ $$2,673\mathrm{.}3$

Operating profit $132\mathrm{.}6139\mathrm{.}7161\mathrm{.}2185\mathrm{.}8215\mathrm{.}7263\mathrm{.}9$

Identifiable assets $909\mathrm{.}71,264\mathrm{.}61,786\mathrm{.}32,108\mathrm{.}92,236\mathrm{.}72,777\mathrm{.}4$

Depreciation $22\mathrm{.}727\mathrm{.}431\mathrm{.}332\mathrm{.}437\mathrm{.}143\mathrm{.}9$

Capital expenditures $371\mathrm{.}5377\mathrm{.}2366\mathrm{.}4808\mathrm{.}3966\mathrm{.}61,241\mathrm{.}9$

Contract Services

Sales $819\mathrm{.}8950\mathrm{.}61,111\mathrm{.}31,586\mathrm{.}32,236\mathrm{.}12,969\mathrm{.}0$

Operating profit $51\mathrm{.}071\mathrm{.}186\mathrm{.}8118\mathrm{.}6154\mathrm{.}9170\mathrm{.}6$

Identifiable assets $373\mathrm{.}3391\mathrm{.}6403\mathrm{.}9624\mathrm{.}41,070\mathrm{.}21,237\mathrm{.}7$

Depreciation $22\mathrm{.}926\mathrm{.}128\mathrm{.}940\mathrm{.}261\mathrm{.}175\mathrm{.}3$

Capital expenditures $127\mathrm{.}743\mathrm{.}855\mathrm{.}6125\mathrm{.}9448\mathrm{.}7112\mathrm{.}7$

Restaurants

Sales $547\mathrm{.}4679\mathrm{.}4707\mathrm{.}0757\mathrm{.}0797\mathrm{.}3879\mathrm{.}9$

Operating profit $48\mathrm{.}563\mathrm{.}879\mathrm{.}778\mathrm{.}279\mathrm{.}182\mathrm{.}4$

Identifiable assets $452\mathrm{.}2483\mathrm{.}0496\mathrm{.}7582\mathrm{.}6562\mathrm{.}3567\mathrm{.}6$

Depreciation $25\mathrm{.}131\mathrm{.}835\mathrm{.}534\mathrm{.}838\mathrm{.}142\mathrm{.}1$

Capital expenditures $199\mathrm{.}665\mathrm{.}072\mathrm{.}3128\mathrm{.}464\mathrm{.}079\mathrm{.}6$