The Hurdle Rate Is

question 18

Multiple Choice

The hurdle rate is:

• A)the rate of money expenditure in a new venture.
• B)the rate charged to the most credit-worthy investors.
• C)the rate paid to the investors before the general partners' cut.
• D)the rate of interest charged on the borrowing firm by the venture capitalists.

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Definitions:

Operating Expenses

The ongoing costs for running a business, excluding the cost of goods sold, such as rent, utilities, and salaries.

Sales Revenues

The gross revenue is the entire sum of money earned from selling goods or providing services prior to subtracting any expenses or costs.

Imputed Interest Rate

The calculated interest rate used in situations where no actual interest rate is specified or when understanding the opportunity cost of an investment.

Residual Income

The amount of income that exceeds the minimum rate of return expected from a particular investment. It is often used as a measure of the performance of an investment or a division within a company.