Hurdle Rate for Average-Risk Projects
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Questions and Answers

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?

  • 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?

  • 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.

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