Question

What two main factors impact the hurdle rate?
Group of answer choices

the manager leading the company

the product being sold

the risk involved

the financing used

Answer 1

The two main factors that impact the hurdle rate are:

• the product being sold
• the financing used

What is a hurdle rate?

This refers to the minimum rate of return on a project or investment that is required by a manager or investor.

The result of the hurdle rate allows most companies to make important decisions on whether or not to pursue a specific project.

Hurdle rates are very important as it is used by Companies to determine whether they will take on capital projects based on the level of risk associated with it.

Hence, the product being sold and financing used are the two main factors that impact the hurdle rate because they impact directly on the project rate of return.

Therefore, the Option B & D is correct.

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