The hurdle rate is often set at:

Question

Quizplus · Accepted Answer

The hurdle rate represents the minimum rate of return a company must achieve in order to pursue an investment opportunity. It is typically set at the company's cost of capital, which includes the return required by both equity and debt investors. This rate reflects the company's opportunity cost of investing its funds and represents the rate of return necessary to compensate investors for the risk they are taking in investing in the project. Option A is too low and does not reflect the return necessary to compensate investors, while options B, D, and E are not commonly used as the basis for setting the hurdle rate.

The Hurdle Rate Is Often Set At