A hurdle rate is generally based on an estimate of the ___________________ of acquiring capital.

Question

Quizplus · Accepted Answer

A hurdle rate is typically based on the weighted average cost of capital (WACC), which is the average cost a company pays to acquire all its capital, including debt and equity. By using the WACC as the hurdle rate, a company can ensure that any investment it makes generates returns that are higher than the cost of the capital used to make the investment. B, C, and D are not accurate choices for the basis of determining a hurdle rate.

A Hurdle Rate Is Generally Based on an Estimate of the ___________________