BibTeX
@MISC{Nunnally_opportunitycost,
author = {Bennie H. Nunnally},
title = {Opportunity Cost Rate Considerations},
year = {}
}
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Abstract
the manner in which the opportunity cost rate is handled in its internal investments. Specifically, the finance staff recognizes that the opportunity cost rate, or hurdle rate, must reflect the variation in expected cash flows. This is so whether it is business unit cash flows or cash flows related to a single capital budgeting project. One particularly important reason for the recent attention to the hurdle rate is the firm’s level of international business activity. The managers believe cash flows provided by overseas revenue may contain an element of risk over and above that incurred in domestic revenues. As a result, the managers are reflecting upon a clear and operational definition, description and measurement of risk as it is reflected in the opportunity cost rate.
Keyphrases
cash flow opportunity cost rate opportunity cost rate consideration hurdle rate finance staff business unit cash flow single capital budgeting project recent attention international business activity overseas revenue domestic revenue operational definition important reason firm level internal investment
