hurdle rate


The required rate of return in a discounted cash flow analysis, above which an investment makes sense and below which it does not. Often, this is based on the firm's cost of capital or weighted average cost of capital, plus or minus a risk premium to reflect the project's specific risk characteristics. also called required rate of return.

Use hurdle rate in a sentence

The hurdle rate was set and we had earned a rate that was greater than it so we were celebrating.

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I wanted to know the hurdle rate because I heard it was important to know it for my brand new company.

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Unless our returns suddenly spike by the end of the quarter, we will not be able to overcome the hurdle rate and will have to withstand a net loss.

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cutoff point cost of capital