The reason behind this practice is the company's strategy which focuses on growth. Using a single hurdle rate for the whole company would be too low for some divisions and too high for others. When hurdle rate is too high, fewer projects would be considered profitable and preset value of project inflows would be reduced... displayed 300 characters
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As a result, Marriott's growth would be reduced too. On the other hand, if the hurdle rate is too low, projects that are not profitable will be selected. Consequently, the company's growth would be hurt as well. Hence, the calculation of costs of capital for use as hurdle rates is essential for managing the company's growth... displayed 300 characters
