Several Managers Suggested That the Company's Financial Analysts Should Add

Multiple Choice

Several managers suggested that the company's financial analysts should add 0.5% to the hurdle rate when calculating the IRR of any investment opportunity to provide an added margin of safety and reduce their performance pressure. What would this action do?

A) Improve shareholder wealth by reducing the risk associated with the outcomes of those projects that were accepted.
B) Reduce shareholder wealth by rejecting otherwise acceptable projects.
C) Reduce shareholder wealth by accepting otherwise unacceptable projects.
D) Improve shareholder wealth by increasing the percent return of projects undertaken.
E) Improve shareholders' wealth by reflecting the added risk perceived by the company's managers.