Video: Hurdle Rate

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 Videos
Working Capital Overview and Objectives
2:07
Introduction to Working Capital
5:06
Economic Order Quantity
4:19
Quick Payment Discount
4:38
Liquidity Ratios
9:01
Activity Ratios
5:18
Profitability Ratios
13:33
Debt/Leverage Ratios
3:55
Internal Rate of Return
2:31
Turnover Ratios
5:25
Company Working Capital Metrics
2:07
Disposing of Accounts Receivable
12:06
Debt Covenants
3:39
Working Capital Summary
1:59
Working Capital - Practice Questions
10:59
Financial Risk Management Overview and Objectives
1:32
Risk and Return
2:28
Market Risk and Diversification
3:18
Types of Risk
7:56
Risk Attitudes
4:59
Required Rate of Return
3:34
Hedges and Financial Products
2:20
Options and Derivatives
6:26
Interest Rate Swap
3:01
Derivatives
4:16
Currency Conversion
7:33
Options as a Hedge Insurance Policy
2:32
Interest Rates
9:03
Financial Risk Management Summary
2:32
Financial Risk Management - Practice Questions
24:32
Capital Structure and Management Overview and Objectives
2:23
Introduction to Capital Structure and Management
5:41
Capital Structure
6:54
Hurdle Rate
2:36
Spectrum of Financing
11:56
Market Capitalization
4:46
Rate of Return vs. Cost
2:54
Weighted Average Cost of Capital
19:00
Cost of Retained Earnings
15:04
Cost of Debt
9:39
Weighted Average Interest Rate
3:31
Cost of Preferred Stock
3:27
Operating and Financial Leverage
19:06
Capital Structure and Management Summary
1:43
Capital Structure and Management - Practice Questions
17:07
Valuation Methods and Models Overview and Objectives
2:12
Introduction to Valuation Methods and Models
3:24
Residual Income and Economic VAlue Added
8:52
Net Present Value
19:22
Internal Rate of Return - Closer Look
12:28
NPV vs. IRR
4:04
Valuation Decision Formulas
9:19
Opportunity Cost
3:45
Economic Return
2:47
Company Valuation Metrics
22:17
Dividends and Bonds
14:05
Valuation Methods and Models Summary
1:33
Valuation Methods and Models - Practice Questions
22:51