For this discussion, focus on the role of a company'scost of capital on capital budgeting decisions. In a recent study the NYU Stern School of Business reported the average cost of capital for a company (as of this month, Jan 2024) in the Hotel Industry is about 8.02%. So for every $1 raised through all sources of financing, an average company in that industry gives out (or pays) almost 8 cents to its investors (i.e., bondholders, banks, common stockholders). That amount is their return or payment for "loaning" their money to the company through their investments.

Lets say that a major hotel chain, like Hilton, has a cost of capital similar to an average company in its industry(about 8%). Keep in the mind the role of the cost of capital, how managers use that number and whether that number is changing for the company.

Discuss in one or two paragraphs if you think the following potential capital projects would be undertaken (i.e., invested in) by this average hotel chain/company. Include why or why not the project should be undertaken, defining what the cost of capital number measures.

Technology Upgrades Project with projected Rate of Return of 6.8% which considers significant cost savings in personnel/time/less errors; Refurbishing of large city hotels with projected Rate of Return of 8.5% which considers the increase in room sales/amenities' fees; and Development of new properties near several large airports globally with projected Rate of Return of 9%.