When discussing the WACC and cost of capital for a specific
project, we made sure to stress that a company should adjust the cost of
capital for the riskiness of the project if it is different from the risk of
the company by using the pure play approach or subjective approach. In this
discussion of the hurdle rate (cost of capital for a specific project), it appears
that many companies are applying the subjective approach to adjusting the cost
of capital, but applying an adjustment factor that is too high. Another important point: The
article notes that the WACC for U.S. companies has been in the 7 percent to 9
percent range for the past 8 years. http://www3.cfo.com/article/2012/2/cash-flow_emerging-markets-hurdle-ratesdominos-pizzaweighted-average-cost-of-capital
