BACHELOR OF BUSINESS ADMINISTRATION

Detailed explanation-1: -Cost of capital is often calculated by a company’s finance department and used by management to set a discount rate (or hurdle rate) that must be beaten to justify an investment.

Detailed explanation-2: -Generally, the hurdle rate is equal to the company’s costs of capital, which is a combination of the cost of equity and the cost of debt. Managers typically raise the hurdle rate for riskier projects or when the company is comparing multiple investment opportunities.

Detailed explanation-3: -The weighted average cost of capital (WACC) is the rate that a company is expected to pay on average to all its security holders to finance its assets. The WACC is commonly referred to as the firm’s cost of capital.

Detailed explanation-4: -A hurdle rate is also referred to as a break-even yield. There are two ways the viability of a project can be evaluated. In the first, a company decides based on the net present value (NPV) approach by performing a discounted cash flow (DCF) analysis.

Detailed explanation-5: -A hurdle rate, which is also known as the minimum acceptable rate of return (MARR), is the minimum required rate of return or target rate that investors are expecting to receive on an investment.