Starwood Hotels & Resorts Worldwide provides lodging services around the world. The company is separated into two major divisions.
• Hotel Ownership: Hotels owned and operated by Starwood.
• Vacation Ownership: Resort properties developed, owned, and operated for timeshare vacation owners.
Financial information for each division, from a recent annual report, is as follows (in millions):

a. Use the DuPont formula to determine the return on investment for each of the Star-wood business divisions. Round whole percents to one decimal place and investment turnover to two decimal places.
b. Determine the residual income for each division, assuming a minimum acceptable income of 5% of total assets. Round minimal acceptable return to the nearest million dollars.
c. Interpret yourresults.

  • CreatedJune 27, 2014
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