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Questions and Answers
How is the hurdle rate for average-risk projects determined?
How is the hurdle rate for average-risk projects determined?
- Never above 15%
- By the prevailing interest rate in the market at that time.
- Based on the weighted-average cost of capital (WACC) (correct)
- It is determined by the industry a company is in.
What is the hurdle rate for average-risk projects?
What is the hurdle rate for average-risk projects?
- Weighted-average cost of capital (WACC) (correct)
- It is determined by the industry a company is in.
- 5%
- The prevailing interest rate in the market at that time.
What is the maximum limit for the hurdle rate of average-risk projects?
What is the maximum limit for the hurdle rate of average-risk projects?
- It is never above 15% (correct)
- The prevailing interest rate in the market at that time.
- Weighted-average cost of capital (WACC)
- It is determined by the industry a company is in.
