The hurdle rate rule uses ________ than ________ to compute the NPV,but then applies the regular NPV rule.
A) a lower discount rate; the cost of capital
B) a higher discount rate; the required rate of return
C) a lower discount rate; the required rate of return
D) a higher discount rate, the cost of capital

Question

Quizplus · Accepted Answer

The hurdle rate rule involves using a higher discount rate than the cost of capital to compute the Net Present Value (NPV). This approach is more conservative, ensuring that only projects with higher returns relative to their risk are accepted.

The Hurdle Rate Rule Uses ________ Than ________ to Compute

The Hurdle Rate Rule Uses Than to Compute