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one discussion point considered when a firm might use a single hurtle rather than different divisional or business unit rates. When a single rate is

one discussion point considered when a firm might use a single hurtle rather than different divisional or business unit rates. When a single rate is used and the divisions are very different in their risk profiles, using a single rate can lead to either an over-investment or an under-investment problem. Using an example, briefly described both of these potential problems.

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