The Hurdle Rate Used in IRR Analysis Should Be

question 31

Multiple Choice

The hurdle rate used in IRR analysis should be:

• A) the risk-free rate.
• B) the current corporate bond rate.
• C) the prime rate.
• D) the discount rate used in NPV analysis.

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Definitions:

Total Profit

is the financial gain made by a business after subtracting all expenses, taxes, and costs associated with generating the revenue.

Profit Per Unit

The amount of profit generated by selling one unit of a product or service.

Profit Maximizing

The process or strategy employed by businesses to increase their profits to the highest possible level given their resources and constraints.

Total Revenue

The income generated by a company from the sale of its goods or services before any costs or expenses are subtracted.