As a financial analyst, you are tasked with evaluating a capital-budgeting project. You were instructed to use the IRR method, a
nd you need to determine an appropriate hurdle rate. The risk-free rate is 4%, and the expected market rate of return is 11%. Your company has a beta of 1.0, and the project that you are evaluating is considered to have risk equal to the average project that the company has accepted in the past. Required:
1. According to CAPM, the appropriate hurdle rate would be ___________.
The capital asset pricing model is used to calculate required rate of return for a certain project. The rate of return is calculated based on risk free rate and rate of return with the volatility. Hurdle rate is the minimum rate return required for a project. The CAPM, is used to calculate the appropriate hurdle rate for the project.
Last in first out (LIFO) is a method used in inventory where the cost of most recently purchased goods is the one to be expensed first. Also current losses are the first to be reported.
An inventory loss incurred in a quarter must not be deferred, but recorded as items within an interim must be reported in the same period they were incurred, unless it can be redeemed before the end of the fiscal year. It is not considered a temporary item.
The loss reported in May will be reported for that quarter in June.
