The rate that management expects to pay on borrowed or equity funds is known as
A) the hurdle rate.
B) the cost of capital.
C) the cutoff rate.
D) all of these.

Question

Quizplus · Accepted Answer

The rate that management expects to pay on borrowed or equity funds is known as the cost of capital. The other options, hurdle rate and cutoff rate, are sometimes used interchangeably with cost of capital but do not necessarily have the same exact meaning.

The Rate That Management Expects to Pay on Borrowed or Equity