Research about human organ donation Essay Example | Topics and Well Written Essays - 1000 words

Research about human organ donation - Essay Example The society has always been a victim of many medical complications and organ transplantation has been embraced in treatment and procedures administered to patients who suffer from related health problems. Having to understand the exact meaning of organ transplantation would give us a vivid insight about the subject matter. The whole process is a surgical procedure where an organ or a tissue is removed and placed into another person. (Clinic-Clevaland 1). Organ transplantation can be broadly defined as moving of an organ from one body to another. The other type of organ transplantation includes transfer of organ from the donor site to another in same person’s body. The organs which can be transplanted are thymus, intestine, pancreas, lungs, liver, kidneys and heart. The tissues which can be transplanted are heart valves, veins, nerves, heart, skin, cornea, tendons and bones etc. There is a range of organs and tissues that that can be transplanted. These include the heart, liver, lung, kidney, ear, intestine, cornea, skin, middle ear, bone, bone marrow, connective tissue and many others. The donation aspect is inspired by a number of issues hence our concern on the ethical aspects involved. The donor in one case might be inspired to be involved to save a life without getting nothing in return. Patients with such difficulties as kidney failure are a good example of such beneficiaries. There have been many cases of lives saved through such donations (Price and Akveld 19-30). A donation might come from a living person or can be extended soon after their death. The organ donor can be living or dead. The definition of dead donor can be circulatory death or brain dead. As per medical authorities, the tissues except cornea can be recovered from the donors who have been declared as the circulatory deaths till 24 hours after cessation of heartbeat. Most of the harves ted

How Sweden's Accounting Financial Statements and Functions Research Paper

How Sweden's Accounting Financial Statements and Functions Differentiate from That of the USA - Research Paper Example It is evidently clear from the discussion that while most nations shifted to the latest version, the United States still favors GAAP and believes that the IFRS has no guidance and comprise several loopholes. It also believes that the adoption of IFRS will lead to chaos and several accounting scandals. Sweden, on the other hand, being a part of the European Union has adopted the IFRS as IAS regulation from the year 2006. Prior to the year 2006, Sweden had been following SFASC (Swedish Financial Accounting Council) Accounting Standards. A lot of changes have been brought about in the financial system throughout the years in Sweden. But with the acceptance of IFRS in Sweden quite a few changes and amendments have been made in order to marginalize with the other nations of the European Union. There have been a lot of differences between the US GAAP and the IFRS. One strong difference between the two is on account of the intangible considerations. According to the GAAP, the acquired intan gible assets are always recognized at fair values. Even the cost allocation is done on individual assets. The intangibles also have a definite life amortized over the period. Few of the examples of such individual assets are research and development, advertising costs; start-up costs and even website developments. Whereas according to the guidelines of IFRS followed by Sweden, the intangibles are recognized only if it has a scope of future economic benefit and has reliability in measuring. Even the initial measurement is done on the cost of the intangible. The mergers and acquisitions i.e. the intangibles are valued at fair cost and the revaluation is also made on a regular basis in order to obtain the actual cost. There is a vast difference between GAAP and IFRS on the basis of revenue. In case of the GAAP, the revenue is recognized on four essential criteria that are persuasive evidence, determinable or fixed pricing, delivery and the assurance of collection whereas in the case of IFRS, the major five criteria are transfer of risk and reward, reliability of measurement, reliability of measurement of the costs incurred or to be incurred, non continuation of management involvement and it also considers the probable economic benefits.

Hamburger and Target Market Essay Example for Free

Hamburger and Target Market Essay This chapter represents the introduction, statement of the problem, objectives and scope and limitations of the study. Introduction A burger is usually defined as a sandwich consisting of a bun, a ground meat patty and often other ingredients such as cheese, onion slices, lettuce and other condiments. The ingredients are often used in combination and are usually called a cheeseburger. Although the origin of the modern beef hamburger came from the Germans, many culinary historians consider the burgers to be primarily from an American concoction. The first burgers were made from various cuts of beef ground into a manageable paste but eventually there emerge different ground meats and vegetable mixtures that have earned the right to be called â€Å"burgers† even in their own distinctive taste. Today, there are dozens of variations on the basic meat patty served between two slices of bread. Indeed through the years, the simple American meal called â€Å"burger† has transformed itself to an array of variations combining different ingredients to suite the taste of millions of people worldwide. Tony Tan Choking, who is the CEO of Jollibee which is considered as the one of the most popular fast-food chain in the Philippines, told in his interview for Business Week Asia that, â€Å"hamburgers, they appeal to any culture†. Taking to account that through this sumptuous dish, Jollibee was able to gain current status in the Philippine business. At present the hamburger toppings may not vary much. Some toppings ramp up taste and may love variants of toppings like the bacon cheeseburger or the replacement of standard condiments (mayo, mustard, ketchup) with things like barbecue sauce. Arguments exist as to what condiments should exist on hamburgers, and also what other things a hamburger needs such as lettuce, tomatoes, onions and pickles. There is no hard and fast rule that requires ingredients to be combined to the more familiar and staple hamburger toppings. In fact, the present times emphasizes creativity and innovation on almost anything even in the traditional hamburgers, which offers usually the same fairly blank palate. Currently an innovation on the burger recipe is viewed as means of culinary expression and way to create exciting and new taste combinations by varying toppings. Ultimately, innovation on the traditional burger combining different ingredients together in different proportions boils down as a means to satisfy one’s palate and finally one’s individuality. Thus with these concept, a new business establishment that deviates from the traditional way on how burger is served has emerged. The business establishment is called Jumbleger and this paper aims to evaluate the business’s feasibility in terms of target market acceptance, profit gain and overall future performance. Statement of the Problem. This paper aims to evaluate the feasibility of an innovative new business establishment to be called Jumbleger in terms of target market acceptance, profit gain and overall future performance. Specifically it aims to answer the following sub-problems: 1. Which among the following groups compose majority of the population surveyed? a. Which of the following age groups compose majority of the population surveyed? b. Which gender compose majority of the population surveyed? c. Which among the different educational attainment compose majority of the population surveyed? d. Among the samples who are students, what schools are they from? f. Which among the different civil status compose majority of the population surveyed? g. Which among the different income bracket is the most common income classification of the population surveyed? 2. Is an innovative new concept of a burger business significantly acceptable to the target market? a. Does majority of the population surveyed eat burgers? b. How often does the majority of the population prefer to eat burgers? c. Does majority of the population surveyed willing to try burgers in new varieties of flavors? d. Among the business establishments who offer burgers in their menu, which is the most preferred by the population surveyed? 3. What are the ingredients most preferred by the population surveyed? a. Among the different kinds of patty which is most preferred by the population surveyed? b. Which among the different kinds of sauces are most preferred by the population surveyed? c. Which among the different toppings are most preferred by the population surveyed? 4. Is the new concept burger be considered affordable to the target population and yet still be a profitable business? a. Among the different price groups for a burger, which will be most preferably spent by majority of the population surveyed? b. How many servings is the majority of the population surveyed able to consume per meal? Objectives of the Study The general objective of this paper is to evaluate the feasibility of an innovative new business establishment to be called Jumbleger in terms of target market acceptance, profit gain and overall future performance. The following are its specific objectives: 1. To determine which among the following groups compose majority of the population surveyed. 2. To evaluate if an innovative new concept of a burger business significantly acceptable to the target market. 3. To identify the ingredients most preferred by the population surveyed. 4. To determine if the new concept burger be considered affordable to the target population and yet still be a profitable business. 5. To derive recommendations for further improvement of the business. Scope and Limitation of the Study The demographic profile as well as the needs and wants of the proposed target market shall be further identified and discussed in the study, in order to asses whether the proposed business would gain impact in the proposed market location. Also, such study shall determine the preferences and level of satisfaction of the proposed market with regard to their food consumption particularly with burgers. The target markets of the proposed business are customers who are frequent in St. Thomas Square, Morayta, more particularly the students from different universities, colleges, review centers and business establishments situated in that vicinity.

Anti-hygroscopicity of Ammonium Nitrate (AN)

Anti-hygroscopicity of Ammonium Nitrate (AN) Anti-hygroscopicity of Ammonium Nitrate (AN) coated by surfactant materials Baha Eldien Ismail Abd Allah Elzaki1,2, Zhang Yue Jun2 Abstract The ammonium nitrate (AN) particles were coated by surfactant materials, using precipitation coating method. The hygroscopicity of AN coated and AN without coating (used as control) were tested, and the samples of AN coated by surfactant materials, and were characterized by Fourier transform infrared (FTIR), and surface morphology of samples were observed by scanning electron microscopy (SEM). Mass friction of coating layer, and decline of absorption rate were calculated. The results indicate that cetylalcohol promising coating surfactant material for AN among the materials tested, namely, stearic acid, octadecylamine, alcohol, palmitic acid, and lauric acid. The mass friction of coating layer, and decline of absorption rate of AN coated by cetylalcohol were 0.98%, and 28.28%, respectively. The idea and approach presented in this paper have potential to made hydrophobic surface on the surface of AN particles to become anti-hygroscopicity. and also used in other energetic materials t o reduce sensitivity. Keywords: Ammonium nitrate (AN); Hygroscopicity; Anti-hygroscopicity; Surfactant materials, Precipitation coating Introduction: Ammonium nitrate (AN) (NH4NO3), is produced by the reaction of anhydrous ammonia gas(NH3), and aqueous nitric acid (HNO3) [1, 2]. Which is present as the major component in most industrial explosives, such as amatol, ANFO, and also used in fertilizers[3-6]. AN is of considerable interest as potential eco- friend oxidizing in solid propellants[2, 7-9]. The risks of used oxidizer ammonium perchlorate (AP) in solid propellants was realized with the hydrogen chloride (HCL) with water form hydrochloric acid which produces highly toxic smoke, this cause significant damage to the environment, due this is reason replaced by AN as oxidizer in solid propellants[10, 11]. It is one of the cheapest, and easily available oxidizer. However, its use in large rocket motors and as solid propellants is restricted due to the hygroscopicity[12]. The molecules of AN are polar it easy absorb the polar moisture from the surrounding, leads to dissolved AN[13]. R.S. Damse used waterproofing materials mineral jelly and other to reduce hygroscopicity of AN[14]. Kun-Lun Hu et.at., used octadecane amine, resin wax and etc as coating agent for coating AN particles (20- 04 meshes), used melting process. Zhang et.al. used silane coupling agent KH792 for coating AN particles (50-75 meshes), used surface chemical coating[15]. The present work deals with a new approach to form the hydrophobic layer on the surface AN particles, by precipitation surfactant materials on the surface of AN molecules. to increase the decline of absorption rate, and decrease mass friction of coating layer, in the conditions of absorption rate measurement, the size of particles of AN are 70-140 meshes, temperature is 35 à ¢Ã¢â‚¬Å¾Ã†â€™, and the relative humidity is 67.5%. Materials and Method: Materials: AN supplied by Kecheng fine chemical CO. Ltd (+99.0% Shanghai, China ), Trichloromethane (+99.0%, Shanghai Ling Feng Chemical Reagent Co. LTD , China), and Cyclohexane (≠¥99.5% Industrial development zone, Chengdu, China). Surfactant materials used AlcoholC18, Stearic Acid, Cetylalcohol, Palmic acid, and Lauric acid (≠¥99.0% Chengdu Kelong chemical Reagent , China), Octadecylamine (≠¥99%Tianjin Fine Chemical Research Institute). Method. 6g of AN coated by 2g of surfactant materials in 15ml chloroform and 15ml cyclohexane. The reaction with stirring at 60oC about 2 h stopped heat, let the reaction contents cooling, the temperature decreasing to 35oC in 5 h, at this stage the water of bath heating was changed, and when the temperature reach to 30oC, the end of reaction. AN coated was filtered by vacuum filter, and drying at 50oC, after drying 5g of AN coated tested at35à ¢Ã¢â‚¬Å¾Ã†â€™, humidity is 67.5% absorption rate test 24h Measurement of absorption rate. The samples were weighed 5g in 30Ãâ€"60 mm weighing bottle without cap, placed in a desiccator containing saturated solution of strontium chloride (relative humidity 68%) of the absorbent 35 à ¢Ã¢â‚¬Å¾Ã†â€™ 24 h, absorption rate of humidity HR was measured by the following equation: Where: HR- absorption rate,%; M0 absorbent sample before mass, g; M mass of the sample after the moisture, g. Mass fraction of coating layer test. Mass friction of coating layer was determined by wetted the filtration paper, dried 1h in an oven weighting (WB). A sample of AN coated after absorption humidity was dissolved in water, and filtered through a tapered funnel, the filter paper was washed by water several times, and placed in an oven 1h, weighing again(WA). The mass fraction of the coating layer was calculated by the following equation: Where: W- mass fraction of coating layer,%. M0 mass of sample before absorbed moisture, g. M1 mass of coating layer, g= WA WB Decline of moisture absorption rate was calculated by following equation: Where: A- decline of moisture absorption rate,%. HR1 absorption rate of AN sample,%. HR2 absorption rate of coated AN sample,%. Characterization. Spectra of the samples were recorded on a Fourier transform infrared (FTIR) spectrophotometer (Thermo Scientific Nicolet I S10, Thermo Fisher USA) by using KBr pellets. Surfaces modified were observed for their morphological study under scanning electron microscopy (SEM) (JEOL JSM 6380LV, Japan). Results and Discussion The absorption rate , mass friction of coating layer and decline of AN coated by different kind of surfactant materials are presented in table 1, in this table used cetylalcohol, alcohol C18, octadecylamine, stearic acid, Palmitic acid, and lauric acid to coated AN , the data from hygroscopicity test clearly indicate that cetylalcohol is the best surfactant materials to coating AN lower mass friction of coating layer was 0.98%, and high decline of absorption rate was 28.28%. Stearic acid and octadecylamine were found second and third best, respectively, while alcohol C18, Palmitic acid and lauric acid followed the order sequentially (table 1). It is seen that when change the concentration of solvents, the decline of absorption rate of AN coated by cetylalcohol, stearic acid, and octadecylamine were slightly decreased, and the decline of AN coated by alcohol C18, Palmitic acid, and Lauric acid were slightly increased (table 2). Also the best coating surfactant materials is cetylalcoho l, has highly decline was 24.09%, and lower mass friction coating layer was 0.89%. Table (1) 2g of surfactant materials, 6 g of AN, 15 mL of chloroform + 15 mL cyclohexane HR measurement conditions (70 mesh 140 mesh or more T = 35 à ¢Ã¢â‚¬Å¾Ã†â€™ humidity is 67.5%) No Surfactants Absorption Rate % Mass friction of coating layer% Decline % 1 Cetylalcohol 5.85 0.98 28.28 2 Stearic acid 6.45 1.20 19.89 3 Octadecylamine 7.71 1.18 19.62 4 Alcohol C18 6.42 0.39 13.13 5 Palmitic acid 6.11 1.14 3.52 6 Lauric acid 6.24 0.87 3.79 Table (2) 2g of surfactant materials, 6 g of AN, 30 mL of chloroform, at 60oC, HR measurement conditions (70 mesh 140 mesh or more T = 35 à ¢Ã¢â‚¬Å¾Ã†â€™ humidity is 67.5%). No. surfactants Hygroscopicity (HR) % Mass friction of coating layer% Decline % 1 Cetylalcohol 5.61 0.89 24.09 2 Stearic acid 6.39 2.56 13.53 3 Octadecylamine 6.42 2.23 13.13 4 Alcohol C18 6.12 1.48 17.19 5 Palmitic acid 6.21 0.46 15.97 6 Lauric acid 6.17 0.48 16.51 In figure 1 observed the effect of time on hygroscopicity of AN coated by surfactant materials (cetylalcohol (a), alcohol C18(b), and stearic acid(c)) and AN without coating (d) were tested in the hygroscopicity test conditions were size of particles of AN were 70-140 meshes, temperature was 35 à ¢Ã¢â‚¬Å¾Ã†â€™, and the relative humidity was 67.5%. The absorption rate directly proportional with time. The lowest regression was obtained from AN coated by cetylalcohol (a), and the highest regression was obtained from AN without coating(d). The absorption rate of AN coated by cetylalcohol is significant than reported in Previous studies[16, 17]. Figure (1) effect of time on the hygroscopicity (Absorption rate) of AN coated by cetylalcohol (a), alcohol C18 (b), stearic acid (c), and AN without coated (d) The influence of the amount of surfactant materials on the decline of absorption rate and mass friction of coating layer were studies on the AN coated by different amounts of cetylalcohol, (0.5, 1.0 1.5, 2.0. and 2.5 g), the regression of decline of absorption rate was increased to high value at 2.0 g of cetylalcohol, then decreased at 2.5g of cetylalcohol, this is due to polar head of surfactant not precipitated on the surface of AN particles, and this causes hydrophilic surface leads to increased hygroscopicity, thus, decreased decline of absorption rate. The mass friction of coating layer directly proportional with the amount of surfactant materials(figure 2). This results significant than results reported in literature[18, 19]. Figure (2) effect of amount of surfactants materials on the absorption rate and mass friction of coating layer. In the measurement of absorption rate used 30Ãâ€"60 mm weighing bottle without cap, the effect of amount of sample in this bottle was studied, the weight of samples were tested 10, 15, 20, and 25 g. The regression of absorption rate is inversely proportional to the weight of the sample, in the both AN coated by cetylalcohol, and AN without coating (figure 3). Figure (3) effect of weight of samples on the absorption rate Characterization: FTIR Absorption Spectra. The surface modified of AN and AN without modified were monitored by using FTIR measurement as depicted in figure 4. Alkanes C-H stretch peak around 3000-2850 cm-1was appeared after coating AN by cetylalcohol (a), higher than AN by alcohol C18, and steric acid in (b) and (d), respectively. Alkanes no appeared in AN without coating in (c). Hence, alkenes non polar has effected on hygroscopicity. Figure 4 FTIR spectra of the ammonium nitrate coated by cetylalcohol (a); ammonium nitrate coated by alcohol C18 (b); ammonium nitrate without coating (c); ammonium nitrate coated by steric acid (d). Scanning Electron Microscopy. The surface morphology in figure (5) presented the AN coated by cetylalcohol has a clear difference in shape particles and the surface smooth than, AN coated by stearic acid (figure 6), octadecylamine(figure 7) , and alcohol C18(figure 8), and ammonium nitrate without coating were observed in figure 9. Figure 5. Scanning electron microscope of surface modification of AN coated by cetylalcohol. The scale bar represents,100 µm. Electron micrographs. Figure 6. Scanning electron microscope of surface modification of AN coated by stearic acid. The scale bar represents, 100 µm. Electron micrographs. Figure 7. Scanning electron microscope of surface modification of AN coated by Octadecylamine. The scale bar represents, 100 µm. Electron micrographs. Figure 8. Scanning electron microscope of surface modification of AN coated by alcohol C18. The scale bar represents, 100 µm. Electron micrographs. Figure 9. Scanning electron microscope of surface of AN without coating. The scale bar represents, 100 µm. Electron micrographs. Conclusions. In this study the cetylalcohol has been found to be the best surfactant materials for coating ammonium nitrate among the materials tested. The mass friction of coating layer of cetylalcohol was found 0.98%, and decline 28.28%, at the hygroscopicity test conditions temperature 30oC, 68% RH, and time 24h. the optimum amount of surfactant material 2g to coating 6g Ammonium nitrate. The samples were characterized by using FTIR spectra, and SEM. The weight of samples in hygroscopicity test effected significantly on the hygroscopicity of AN.

Love Cant Be Simply Put :: essays research papers

The famous Benjamin Franklin once said, "If you would be loved, love and be lovable." But what is love, it can be defined by the Webster's dictionary as a "profoundly tender, passionate affection for another person." Even with that just being said countless poets, philosophers, and authors have fallen short of truly capturing the full meaning of love. The reason could lie in the differences of love and its ability to change throughout our lives. When a baby is born and placed into the hands of loving parents, the love that the baby is able to get is vital in the development of it. The love or lack of love starts to change you from the beginning of your life and continues throughout adulthood. The young baby needs the love and wants the attention. It needs to be protected and cared for. Undoubtedly there is a major love for a baby and the love of the baby for the mother. Interestingly some people say that they love chocolate, basketball, sex, and even cars. But that doesn't fall into the Webster's definition of being "profoundly tender, passionate affection for another person." Also it doesn't agree with Benjamin Franklin's, "If you would be loved, love and be lovable." As everyone knows the game of basketball is not a person and it can't love you back. So why would someone say that they love those things? I know from my own experiences that I have a passionate affection for playing the game and I feel a joy in playing it. Continuing to blur the meaning of love with it's diversity in the relationships we have for people and objects. For instance, I love my mom, dad, brothers, dog, sports, and many more. During certain periods of my life the love will certainly rise or fade. Also the intensity of that love is not the same in all those relationships. For I have never been in love with a girl, I may only imagine what it might be like to be in love. Guessing from my friends relationships with other girls it seems like a big headache instead of wonderful bliss like some poets maybe would like to put it. When Benjamin Franklin said, "If you would be loved, love and be lovable," he must have meant that love goes both ways. That not only is it important to love but also important in how it is received.

Platos The Allegory of the Cave Essay -- Plato Allegory Cave Essays

Plato's The Allegory of the Cave In Plato’s â€Å"The Allegory of the Cave,† he suggests that there are two different forms of vision, a â€Å"mind’s eye† and a â€Å"bodily eye.† The â€Å"bodily eye† is a metaphor for the senses. While inside the cave, the prisoners function only with this eye. The â€Å"mind’s eye† is a higher level of thinking, and is mobilized only when the prisoner is released into the outside world. This eye does not exist within the cave; it only exists in the real, perfect world. The â€Å"bodily eye† relies on sensory perceptions about the world in order to determine what is reality. Metaphorically speaking, the cave is a physical world filled with imperfect images. This world is filled with distorted images about reality. Inside the cave, the prisoners believe that the shadows they see on the wall are actual reality. Their â€Å"bodily eye† tells them that this world is real because their senses perceive so. Plato suggests that the senses do not perceive actual truth. The â€Å"mind’s eye† is not active inside the cave because the prisoners are imprisoned in this distorted world, which they believe is reality. When one prisoner is pulled out of the cave and into the light, it is this sudden freedom that starts the gradual process of enlightenment. This sudden freedom opens the â€Å"mind’s eye†. The prisoner â€Å"will be able to see the sun, and not mere reflections of him in the water, but he will see him in his own proper place, and not in another; and he will contemplate him as h...

HBS Marriott Case

Marriott Corporation has three divisions – lodging, contract services and restaurants – with dissimilar operations. The company uses three separate hurdle rates for the three divisions to value the proposed projects. It is believed that this strategy is more appropriate that using a single firm-wide discount rate because the operations of the three divisions differ drastically. However, the company has to ensure that the company uses an appropriate discount rate for each division. Therefore, we calculate the appropriate cost of capital for Marriott as well as for each of the three divisions. A detailed analysis is presented about the appropriate calculation inputs for each of the three divisions and various assumptions, made while performing the calculations, are justified. 1) Are the four components of Marriott's financial strategy consistent with its growth objective? The first component of the strategy is to manage rather than own the hotel properties. This objective mitigates the investment needed to launch new hotels, as the general partner is not required to make significant investments. Although it may be argued that such a strategy could decrease the profit margins, the growth prospects are certainly easily achievable because of less limitation on the resources required. The second objective is an important characteristic of modern corporate finance. It believed that focusing on maximizing shareholder value should be the underlying aim of every corporation, leading to stable growth and healthy profits. With regard to the third objective, Miller and Modigliani claimed that the use of debt, in the presence of corporate taxes, could increase the value of a company through the value added by debt tax shield. In modern finance, it is commonly believed that debt can increase the value of a corporation. However, a company should be careful about high debt levels because of the distress costs associated with high debt. As stated by Marriott, a corporation should aim to optimize its debt at the most beneficial level. The repurchase of undervalued shares might not always be consistent with the growth objective. The repurchase program could make sense if the shares are believed to be highly undervalued and the company does not have more attractive investment opportunities to utilize its cash. However, the strategy could also hinder growth if the company is foregoing highly profitable investment opportunities in order to take advantage of slight under pricing in its shares. 2) How does Marriott use its estimate of its cost of capital? Does this make sense? Marriot evaluates its investment opportunities using the discounted cash flow approach, which requires an estimate of the cost of capital. Technically, the cost of capital for each investment should be commensurate with the amount of risk inherent within the investment. Thereby, if a company has ten different prospective investments, it could have ten different cost of capital estimates for the investments. However, it is impractical for companies to estimate a separate cost of capital for each investment opportunity. Usually, a company operates in a uniform line of business and has investment opportunities with similar risks. Therefore, it is normal for companies to use a single firm-wide cost of capital. However, companies with multiple divisions often use separate cost of capitals for the divisions because each division has separate operations and risks. Marriott Corporation has three separate divisions and employs three separate hurdle rates – one for each division. This treatment is consistent with theory as long as the hurdle rates adequately compensates for the risk inherent in each division’s investment and risk does not vary significantly across investments within a division. ) What is the weighted average cost of capital for Marriott Corporation as a whole? What risk-free rate and risk premium do you use to calculate the cost of equity? How do you measure Marriott's cost of debt? There is no agreed-upon measure of riskfree rate that investors could use. In fact, the available riskfree interest rate could be argued to change with changes in business cycles and economic policies. In t he US, the rate offered by US Treasury securities is often deemed riskfree because of the negligible default risk. However, there is a disagreement regarding the maturity of the treasury security that should be used as a proxy for riskfree rate. Since Marriott is seeking to optimize its debt at a long-term stable level, it is believed that the maturity of the company’s debt will be long. Therefore, the 10-year Treasury bond seems to be an appropriate measure of riskfree rate. The cost of debt is calculated by adding the specified risk premium to the selected riskfree rate. The cost of equity can be calculated using the Capital Asset Pricing Model (CAPM). The market risk premium is an important constituent of the CAPM. The market risk premium estimates the premium for the excess risk taken by market participants. Investors can earn a certain degree of return – the riskfree rate – without taking any risk. Therefore, the riskfree rate should be subtracted from the market return to calculate the market risk premium – the extra return that investors earn by taking risk. We already have an estimate of the riskfree rate that can be used for Marriott. Therefore, the market risk premium can be calculated by estimating the appropriate market return. The proxy for market return is usually a national stock index such as the S&P500 for US companies. In contrast to the Treasury bond market, where the yields provide an estimate of the future returns on the security, there is no consensus estimate on the future expected return on the stock market. Therefore, historical averages of stock returns are typically used to estimate the future expected return on the market. We use biggest available period – 1926 to 1987 – to estimate the average historical market risk premium. The information about riskfree rate and the market risk premium can be combined with equity beta of Marriott (provided in the case study) to calculate to cost of equity of the company. Once we have the respective costs of debt and equity, the weighted average cost of capital (WACC) is simply their average – weighted using the target proportion of debt provided in the case study. The calculations in the attached spreadsheet show that the WACC for Marriott is 10. 39%. 4) What type of investments would you value using Marriott's cost of capital? The cost of capital estimates the riskiness of an average investment within the company. If an investment under consideration by Marriott has more risk than the average investment risk, the cost of capital would understate the risk and overstate the value of investment. On the other hand, if an investment has less risk than the average investment risk, the cost of capital would overstate the risk and understate the value of investment. Therefore, the cost of capital is only appropriate for valuing investments, which closely resemble the typical investments carried out by Marriot Corporation. If an investment has a different amount of risk than the typical investment in Marriott, the company should strive to calculate the cost of capital that is consistent with the investment in question. One way of estimating the appropriate cost of capital would be to look at the comparable companies where that particular investment would be a typical investment. For example, an investment in sports equipment could be evaluated by looking at the cost of capital used by a sports club that uses similar equipment. ) If Marriott used a single hurdle rate for evaluating projects in each of its divisions, what would happen to the company over time? Marriott has three separate divisions with dissimilar operations. The firm-wide cost of capital is probably a weighted average of the three individual costs of capital commensurate with each of the three divisions. While the firm-wide cost of capital might be a good measure of the risk of an average investment undertaken by the company, it is proba bly not a good measure of the investment risk inherent in each division’s average project. If the company continues to use a single discount rate for each of its three divisions, the project cash flows of the division with more than average risk would be overstated, while the project cash flows of division with less than average risk would be understated. Therefore, division with more than average risk would start accepting projects that would have been otherwise rejected if a more appropriate higher discount rate were used. On the other hand, the division with less than average risk would start rejecting projects that would have been accepted if a more appropriate lower discount rate were used. In short, the more risky division would accept negative NPV projects, while the less risky division would reject positive NPV projects. 6) What are the costs of capital for the lodging and restaurant divisions of Marriott? The division wise calculations of the cost of capital are shown in the attached spreadsheet. The weighted average costs of capital for the lodging and restaurant divisions are 9. 76% and 13. 32% respectively. It is important to note that the discount rates differ because certain inputs in the calculations are dissimilar. The most significant differences are in riskfree rates, asset betas, and debt proportions. a) What risk-free rate and market risk premium do you use in calculating the cost of equity capital for each division? How do you choose these numbers? There is no full consensus of which proxy for riskfree rate should be used. Nevertheless, it is generally believed that the maturity of the riskfree rate proxy should match the purpose for which the rate is utilized. It is mentioned that the lodging division has more long-term assets, while assets of restaurant division are short-term in nature. Therefore, one-year riskfree rate has been employed in the restaurant division, whereas a higher ten-year rate has been utilized in the lodging division. On the other hand, the market risk premium for both divisions is the same as the market risk premium previously used for the whole company. Although the asset betas for the divisions have been calculated using the past five years data, it is believed that a larger pool of data should be used to estimate the market risk premium because the recent volatility in the markets might distort results. ) Did you use arithmetic or geometric averages to measure rates of returns? The arithmetic mean adds the annual historical risk premiums and averages the results, while the geometric mean is equal to the compounded annual risk premium. In professional practice, both these methods of calculating average historical risk premiums are regularly employed. However, there is a major statistical difference between the two approaches. Geometric mean is a compounded average of risk premiums and is, therefore, a good predictor of the risk premium over multiple future time-periods. On the other hand, arithmetic mean is the best predictor of risk premium for the forthcoming time-period. In other words, arithmetic mean would be better at predicting the risk premium for the next year, while geometric mean would be superior at predicting the average risk premium over the next few years combined. In this case, we are calculating the risk premium for the purposes of using it in the CAPM model. The CAPM is a single period model, which estimates the cost of equity over a specified time interval. Therefore, the arithmetic mean might be a better method in this context. ) How do you measure the cost of debt for each division? Should the cost of debt differ across divisions? The rationale for using different riskfree rates for the division has already been explained in the preceding section. The case study also provides different levels of risk premiums that should be added to the riskfree rate to calculate the total cost of debt. It could be argued that the company only p ays a single cost of debt, and there is no need to calculate separate cost of debt for each division. However, each division has separate financial leverage, different sales, and a unique ability to cover its debt obligations. Therefore, each division’s debt should also be rated separately for more accurate capital budgeting. d) How do you measure the beta of each division? The betas for the divisions have been calculated using the pure play approach. Under this approach, the equity betas for companies, comparable to each division, are unlevered in accordance with the respective leverage. The resulting asset betas are then averaged to obtain an estimate of the asset beta for each division. Subsequently, the respective asset beta for each division is relevered, using the target debt ratio for the division, to obtain the equity beta. ) What is the cost of capital for Marriott's contract services division? How can you estimate its cost of equity when there are no publicly traded comparables? The beta for contract services division cannot be obtained directly because there are publicly traded comparable companies, which could have been used to employ the pure play approach. However, we do have informati on about the asset beta of the overall company as well as the asset betas for the remaining two divisions. Theoretically, the overall asset beta for Marriott should be a weighted average of the individual asset betas for the three divisions. The weights can be calculated using the information about identifiable assets in each division. Thereby, the only unknown in the equation is contract services division’s asset beta, which can be obtained through basic arithmetic. Subsequently, the asset beta can be levered using the target debt proportion to obtain the equity beta, which can be used is the CAPM equation to calculate the cost of equity for contract services division. The WACC for the division is simply the weighted average of its cost of equity and cost of debt. The calculations in the attached spreadsheet estimate the cost of capital to be 8. 4%. 8) Marriott also considered using the hurdle rates to determine incentive compensation. How do we link this with the Economic Value Added (EVA) approach? The objective of any company’s management should be to maximize the shareholder wealth. Shareholder wealth increases when a company consistently produces positive economic value. In this context, economic valu e added is measured as the excess operating profits over the dollar cost of capital. In mathematical terms, economic value added equals net operating profits after tax minus the product of cost of capital and capital employed (dollar amount of WACC). The concept of economic value added is closely linked to the concept of net present value (NPV) calculated using the hurdle rates. Specifically, a positive NPV project will generate positive EVA, while a negative NPV project will generate negative EVA. Therefore, if a company only accept positive NPV projects, calculated using the appropriate hurdle rates, it will generate positive EVA on the profits generated from these projects. Therefore, a manager’s compensation could be linked to the amount of positive net present value that the manager generates through new investments.