Page 92 - BV-BC 4 days
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Creating a Discounted Cashflow
Hurdle Rate
Once the true WACC has been calculated, CFOs will
adjust the figure to allow for time value of money and
level of project risk.
For example, if the WACC is 4.5% and the CFO
thinks that inflation might be 0.5% and risk might be
2% then the Hurdle Rate will be 4.5 + 0.5 + 2 = 7%
