The question is "The summer intern Tim hired last year provided an estimate on the inventory holding rate, which included the cost of capital at 9.5 percent and the cost of storage and handling at 7 percent. The hurdle rate used for capital expenditures is set at 30 percent by head office. Which one would you use for the inventory holding rate, 9.5+7%, 30 %, or 30+7 %? Why?"

The answer is "I will prefer 30+7 % because at this rate the company will be able to earn profits. Hurdle rates are used to represent the minimal rate of return a corporation anticipates to gain from investing in a project. Also known as the required rate of return or target rate, the hurdle rate is a percentage rate of return that must be achieved. To be approved, a project's internal rate of return must reach or surpass the hurdle rate established by the sponsor. Therefore, or 30+7 % will be preferable since it is greater than the hurdle rate (30%)"

I'm confused on "inventory holding rate", I can't find the defination. Also, in my opinion, It shouldn't be so high cuz it may due to risk of overstock.