F-137-19: Hurdle Rates, Cost of Capital & Capital Structure: CFO Spotlight

Use this thread to discuss ANYTHING and EVERYTHING related to this syllabus reading.
Some possible questions include:

  • How can this reading be tested?
  • I don’t understand a specific topic/formula - Can we discuss this?
  • This reading gives me nightmares. Can we talk through it a bit?

Good luck!

This presentation from Macquarie University highlights the differences in approach for setting a WACC and hurdle rate. What do you think the pros and cons are of:

A. Having an unadjusted or fixed hurdle rate? Slide 6 mentions 50% of companies rarely change their hurdle rates.

B. Having a risk adjusted hurdle rate? Slide 5 showcases a good example of this.