Ritz Carlton
http://qualitydigest.com/IQedit/QDarticle_text.lasso?articleid=12186 http://www.businessweek.com/smallbiz/content/feb2007/sb20070213_171606.htm http://www.answers.com/Ritz+carlton+hotel?cat=biz-fin 1-What was the total capital budget at the Ritz Carlton Hotel?
Capital Budget: Long-term financing and expenditure plan for acquisition, construction, or improvement of fixed assets such as land and buildings
The total capital budget of Ritz Carlton Washington D.C. was $225 million. this hospitality complex covered tow- and a half acres and include 162 luxury condominiums , a 100, 000 square foot Sports club /LA , a splash Spa , three restaurants , 40000 square feet of street-level restaurants and retail shops featuring the latest designs from Italy and other countries ,as well as 300 room hotel.
2- What was the cost of capital for each division at the hotel?
The rate of return an enterprise has to offer to induce investors to provide it with capital. The cost of loan capital is the rate of interest that has to be paid. The cost of equity capital is the expected yield needed to induce investors to buy shares.
Capital (money) used to fund a business should earn returns for the capital owner who risked their saved money. For an investment to be worthwhile the estimated return on capital must be greater than the cost of capital. Otherwise stated, the risk-adjusted return on capital (incorporating not just the projected returns, but the probabilities of those projections) must be higher than the cost of capital.
The cost of debt is relatively simple to calculate, as it is composed of the interest paid (interest rate), including the cost of risk (the risk of default on the debt). In practice, the interest paid by the company will include the risk-free rate plus a risk component, which itself incorporates a probable rate of default (and amount of recovery given default). For companies with similar risk or credit ratings, the interest rate is largely exogenous.
Cost
Capital Budget: Long-term financing and expenditure plan for acquisition, construction, or improvement of fixed assets such as land and buildings
The total capital budget of Ritz Carlton Washington D.C. was $225 million. this hospitality complex covered tow- and a half acres and include 162 luxury condominiums , a 100, 000 square foot Sports club /LA , a splash Spa , three restaurants , 40000 square feet of street-level restaurants and retail shops featuring the latest designs from Italy and other countries ,as well as 300 room hotel.
2- What was the cost of capital for each division at the hotel?
The rate of return an enterprise has to offer to induce investors to provide it with capital. The cost of loan capital is the rate of interest that has to be paid. The cost of equity capital is the expected yield needed to induce investors to buy shares.
Capital (money) used to fund a business should earn returns for the capital owner who risked their saved money. For an investment to be worthwhile the estimated return on capital must be greater than the cost of capital. Otherwise stated, the risk-adjusted return on capital (incorporating not just the projected returns, but the probabilities of those projections) must be higher than the cost of capital.
The cost of debt is relatively simple to calculate, as it is composed of the interest paid (interest rate), including the cost of risk (the risk of default on the debt). In practice, the interest paid by the company will include the risk-free rate plus a risk component, which itself incorporates a probable rate of default (and amount of recovery given default). For companies with similar risk or credit ratings, the interest rate is largely exogenous.
Cost