Response to the following problem:
You Decide: Should a project be accepted or rejected if the project has an internal rate of return that is less than the company's hurdle rate?
You are the CFO for an automobile manufacturer. The board of directors is considering expanding the current product line to include sports utility vehicles. As you look at the new product line's internal rate of return, it is 12% and the company's overall discount rate is 15%. Should the new line be added to the company's existing lines?
The board wants your input before they make a decision. What factors should you consider?