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Some projects that a firm accepts will undoubtedly result in zero or negative returns. In light of this fact, it is best if the firm:

 

adjusts its hurdle rate (i.e., cost of capital) upward to compensate for this fact.

 

adjusts its hurdle rate (i.e., cost of capital) downward to compensate for this fact.

 

does not adjust its hurdle rate up or down regardless of this fact.

 

raises its prices to compensate for this fact.

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Question added by Emad Mohammed said abdalla , ERP & IT Software, operation general manager . , AL DOHA Company
Date Posted: 2015/04/05

My answer is option (C)  does not adjust its hurdle rate up or down

Emad Mohammed said abdalla
by Emad Mohammed said abdalla , ERP & IT Software, operation general manager . , AL DOHA Company

>>>>>> does not adjust its hurdle rate up or down regardless of this fact.

 

Alex Al Yazouri
by Alex Al Yazouri , General Manager , Al Mushref Cooperative Society

>>>>>>>>>>>>>> does not adjust its hurdle rate up or down regardless of this fact.

Mir Mujtaba Ali
by Mir Mujtaba Ali , Internal Audit Manager , Confidential

does not adjust its hurdle rate up or down regardless of this fact

<<>>

Agree with choice of the experts

 

Wolf Klaas Kinsbergen
by Wolf Klaas Kinsbergen , Managing Director, Designer , ingenieursbureau KB International NV

It must be answer C: does not adjust its hurdle rate up or down regardless of this fact.

But also evaluate the Projects to see where it goes wrong.

Wasi Rahman Sheikh
by Wasi Rahman Sheikh , WAREHOUSE SUPERVISOR , AL MUTLAQ FURNITURE MFG

Right answer option3 ,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,

PURUSHOTHAMAN JANAKIRAMAN
by PURUSHOTHAMAN JANAKIRAMAN , Laundry Maintenance Engineer , Advanced Technology Company

reference for answer:  http://web.utk.edu/~jwachowi/mcquiz/mc15.html

 

Correct answer is does not adjust its hurdle rate up or down regardless of this fact.

 

 

Can understand its way of functioning and can reposition its strategies further on what to do and correcting areas that had the undesired shortcomings

Muhammad Rehan Tahir  ACCA
by Muhammad Rehan Tahir ACCA , Treasury Manager , Farouk, Maamoun Tamer & Company

I'll go with option3, firm should not accept project whose IRR is less than their cost of capital.

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