Which of the following is a weakness of using a hurdle rate as a standard of evaluating the performance of a division?
A) The process is time-consuming.
B) The process is fraught with political intrigue.
C) This approach lets other firms determine what is and what is not excellent performance for a division within a diversified firm.
D) The use of such a single standard ignores important differences in performance that might exist across divisions.

Question

Quizplus · Accepted Answer

The use of a hurdle rate as a single standard for evaluating the performance of a division ignores important differences that may exist across divisions. This may not provide an accurate measure of the division's performance as the hurdle rate may not capture the unique circumstances and challenges faced by each division.

Which of the Following Is a Weakness of Using a Hurdle