4 Time remaining: 00:09:27 Economics Hurdle rates (minimum required rates of return) are often used by development banks such as the World Bank. Suppose the World Bank hurdle rate is 3%. The World bank is currently evaluating a carbon investment in Brazil that will require 1.35 million dollars given to Brazil now, in return for Brazil setting aside forest land and then returning 2.0 million dollars back to a carbon credit owned by the bank in 10 years. The world bank has already paid 1 million dollars in the past two years to set up a carbon payment fund that can generally be used for these purposes. Will the following investment in this carbon market make sense for the World Bank? A. No because the rate of return is equal to 2.4% B. No, because the opportunity cost of waiting is too high C. Yes, because the ratio of benefits to costs is greater than 3% D. Yes, because the rate of return is equal to 4.0%
4
Economics
Hurdle rates (minimum required
A. No because the rate of return is equal to 2.4%
B. No, because the
C. Yes, because the ratio of benefits to costs is greater than 3%
D. Yes, because the rate of return is equal to 4.0%
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
