In this lesson, Nick Palazzolo, CPA, demystifies the concept of hurdle rate and its significance in making investment decisions. He clarifies that projects are only given the green light when the internal rate of return meets or exceeds the hurdle rate, ensuring that the investment surpasses the break-even point. Nick illustrates this principle by referencing Costco's unique business model, where operational break-even is achieved, and profit is primarily derived from membership fees. The analogy to Costco makes the concept relatable and easy to understand, allowing for a deeper grasp of how hurdle rates influence strategic financial choices.
Lesson: Hurdle Rate
Instructor: Nick Palazzolo
In this lesson, Nick Palazzolo, CPA, demystifies the concept of hurdle rate and its significance in making investment decisions. He clarifies that projects are only given the green light when the internal rate of return meets or exceeds the hurdle rate, ensuring that the investment surpasses the break-even point. Nick illustrates this principle by referencing Costco's unique business model, where operational break-even is achieved, and profit is primarily derived from membership fees. The analogy to Costco makes the concept relatable and easy to understand, allowing for a deeper grasp of how hurdle rates influence strategic financial choices.
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Investment Analysis
Module:
4 Concepts,
58 Lessons
Liquidity Ratios
9:01
Activity Ratios
5:18
Profitability Ratios
13:33
Debt/Leverage Ratios
3:55
Turnover Ratios
5:25
Debt Covenants
3:39
Risk and Return
2:28
Types of Risk
7:56
Risk Attitudes
4:59
Interest Rate Swap
3:01
Derivatives
4:16
Currency Conversion
7:33
Interest Rates
9:03
Capital Structure
6:54
Hurdle Rate
2:36
Spectrum of Financing
11:56
Cost of Debt
9:39
Net Present Value
19:22
NPV vs. IRR
4:04
Opportunity Cost
3:45
Economic Return
2:47
Dividends and Bonds
14:05
