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e. CAGR (compound normal advancement return). A cash investor is definitely interested in the net return acquired year after 12 months, Hence usage of geometric is a lot more proper. Therefore we would use geometric common for possibility cost-free rate and hazard quality for each of your 3 divisions, as given in exhibit five with the case.
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For Marriott, the expense of capital is the whole in the management charge and operating payment. The a few major functioning fees are the cost of construction, expense and depreciation.
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