Which of the Following Is a Weakness of Using a Hurdle

question 29

Multiple Choice

Which of the following is a weakness of using a hurdle rate as a standard of evaluating the performance of a division?

• A) The process is time-consuming.
• B) The process is fraught with political intrigue.
• C) This approach lets other firms determine what is and what is not excellent performance for a division within a diversified firm.
• D) The use of such a single standard ignores important differences in performance that might exist across divisions.

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Definitions:

Appraisal Value

An estimation of a property's market value based on an appraiser’s knowledge, experience, and analysis of the property.

Mortgage

A loan typically used to purchase real estate, where the property itself serves as collateral for the loan.

Units-Of-Output Method

A depreciation method that allocates the cost of an asset over its useful life based on the units it produces, reflecting usage rather than mere passage of time.

Depreciation Expense

An accounting method that systematically allocates the cost of a tangible asset over its useful life.