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Which of the following is another name for hurdle rate? A. Weighted average cost of capital...

Which of the following is another name for hurdle rate?
A. Weighted average cost of capital
B) cost of doing business
C) NPV
D) IRR
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Answer #1

A.Weighted average cost of capital

In corporate finance setting, hurdle rate and WACC are the same thing.

WACC is used as a hurdle rate to assess whether or not a company produces value for investors measured by ROIC. If a company's WACC is greater than it's ROIC then the company is generating a net negative return on capital and vice versa.

"WACC can be used as a hurdle rate against which to assess ROIC performance. Investors use WACCas a tool to decide whether to invest.

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