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NEW QUESTION: 1
For capital budgeting purposes, management would select a high hurdle rate of return for certain projects
A. Believes bank loans are riskier than capital investments.
B. Wants to use equity funding exclusively.
C. Wants to factor risk into its consideration of projects.
D. Believes capital investment proposals involve average risk.
Choice "d" is correct. Management would select a high hurdle rate for certain projects to factor risk into its
consideration of projects. The higher hurdle rate discounts future cash flows more, creating a smaller
present value. By "devaluing" the cash flows of certain projects, risk has been compensated for. Choices
"a" and "b" are incorrect. The method and cost of funding are independent of the hurdle rate for screening
investments. Choice "c" is incorrect. If capital investment proposals involve average risk, no adjustment
upward is needed for risk.
NEW QUESTION: 2
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C. Amazon ElastiCache
D. Amazon Elastic Map Reduce
E. Amazon DynamoDB