On the other hand, according to J. P. Morgan,26 the weighted average cost of capital remains quite low at 8.5 per cent but the median hurdle rate (minimum return on investment needed to justify a new project) reported by S&P 500 companies is 18 per cent. This suggests that companies are not pursuing investment opportunities unless the differential between their expected returns and their cost of capital is around 10 percentage points. Why would they leave such opportunities on the table? One explanation, given the exigencies of MSV, is that they have easier alternatives–such as share
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