Question
Explain the rationale behind usinExplain how the single hurdle rate currently used by Northern Forest Products can change the risk structure of the company. For
Explain the rationale behind usinExplain how the single hurdle rate currently used by Northern Forest Products can change the risk structure of the company. For example, think about what would happen if the Plastic Products Division received a disproportionately high level of funding because their returns exceed the company hurdle rates (its growth rate substantially exceeds the corporate average). Assuming that the risk of the division remains unchanged, what effect would this have, over time, on NFPs corporate beta and on the overall cost of capital?
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