Hurdle rates assume that hershey foods has a policy that, Ask an Expert

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Hurdle rates. Assume that Hershey Foods has a policy that cost savings projects must earn a 16 percent hurdle rate and that new products must earn a 25 percent hurdle rate. The hurdle rate is a result of historical analysis and the perceived risk associated with both project types.

I have funding requests for two projects, project A, which is a cost savings project with a 16.5 percent rate of return and project B, which is a higher-returning, new product and has a 22 percent rate of return. If I can fund only one of them, which project should I recommend and why?

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