TG Enterprises owns a small start-up company, and wants to expand his business. In order to do so, he is soliciting capital investments and loans. He has incorporated his company, and plans to issue stock and take out a bank loan in order to finance the expansion. He projects that the funds invested now will produce returns of 10% per year.
Following is information related to the capital sources TG Enterprises plans to use.
TG Enterprises is also interested in making sure that he also profits from the project, and he will only accept the project if the rate of return exceed the cost of capital by at least 2 percentage points.
Does the proposed project clear TG Enterprises' hurdle rate?

Question

TG Enterprises owns a small start-up company, and wants to expand his business. In order to do so, he is soliciting capital investments and loans. He has incorporated his company, and plans to issue stock and take out a bank loan in order to finance the expansion. He projects that the funds invested now will produce returns of 10% per year. 
Following is information related to the capital sources TG Enterprises plans to use.
  TG Enterprises is also interested in making sure that he also profits from the project, and he will only accept the project if the rate of return exceed the cost of capital by at least 2 percentage points.
Does the proposed project clear TG Enterprises' hurdle rate?

Quizplus · Accepted Answer

The Answer of TG Enterprises owns a small start-up company, and wants to expand his business. In order to do so, he is soliciting capital investments and loans. He has incorporated his company, and plans to issue stock and take out a bank loan in order to finance the expansion. He projects that the funds invested now will produce returns of 10% per year. 
Following is information related to the capital sources TG Enterprises plans to use.
  TG Enterprises is also interested in making sure that he also profits from the project, and he will only accept the project if the rate of return exceed the cost of capital by at least 2 percentage points.
Does the proposed project clear TG Enterprises' hurdle rate?

TG Enterprises Owns a Small Start-Up Company, and Wants to Expand