A company's hurdle rate on proposed investments is 8.5%. The company is evaluating a proposed investment costing $35 million that will produce a series of projected annual cash flows over a period of 10 years, so that the 10-year internal rate of return (IRR) is 7.7%. How could the company increase the IRR so that the hurdle rate is met?

A company's hurdle rate on proposed investments is 8.5%. The company is evaluating a proposed investment costing $35 million that will produce a series of projected annual cash flows over a period of 10 years, so that the 10-year internal rate of return (IRR) is 7.7%. How could the company increase the IRR so that the hurdle rate is met?

A company's hurdle rate on proposed investments is 8.5%. The company is evaluating a proposed investment costing $35 million that will produce a series of projected annual cash flows over a period of 10 years, so that the 10-year internal rate of return (IRR) is 7.7%. How could the company increase the IRR so that the hurdle rate is met? 






A) Reduce the analysis period to less than 10 years
B) Reduce the cost of capital
C) Evaluate cash flows on a monthly basis
D) Reduce the cost of the investment







Answer: D