Among the 30 blue chip stocks in the PSE index, there are only 11 that generate positive residual earnings while others earn below their hurdle rates
More Diverse Array of Fee Structures are being offered to investors than ever before, with 76% of investors taking advantage of options such as early stage discounts from new launches, reduced fees for longer lock-ups, sliding fee schedules based on fund AuM, large ticket discounts and hurdle rates
or other types of customized terms.
The transaction is expected to generate returns exceeding SES's hurdle rates
for infrastructure investments.
The company added: "Bovis Homes is appraising a number of these opportunities to assess where it can invest cost effectively and generate attractive returns at or above the group's investment hurdle rates
Only 25% of the retailers said they were working to take advantage of real estate deals that were becoming available to increase market share, while more than 80% of the 60% are undertaking a review of their portfolios are slowing down new store openings and/or remodels especially if the new hurdle rates
are not being met.
In response to the government's invitation, TEI submitted three examples of the use of other discount rates such as risk-adjusted hurdle rates
and risk-adjusted cash flows.
Stock options in such companies could be less effective, as the hurdle rates
may become unachievable.
This highlights the necessity for future empirical studies on capital budgeting to distinguish between alternative forms of hurdle rates
. Contrary to conventional wisdom, I further show that if compensation contracts are derived endogenously, then the shareholders will ultimately benefit from the manager's empire benefits even under asymmetric information.
This study proposes that organizations should consider project hurdle rates
, as part of their control system design, to reduce escalation of commitment behavior in managers.
The two-period example in the previous section may seem contrived, but McDonald (1999) shows that for a given cost of capital, a wide range of hurdle rates
will result in decisions that are close to the optimal decision based on dynamic programming.
However, it is still useful to look at the average information, since it emphasizes the four-dimensional nature of the problem of setting hurdle rates
as a function of stage, namely variations in stage time, magnitude of investment, changing interest rate structure or cost of capital, and finally risk profile.