Hurdle Rate

• Investopedia - Hurdle Rate

A hurdle rate is the minimum return needed for a manager or investor to accept a project. It’s important when companies or investors make important decisions like pursuing a specific project. Riskier projects generally have higher hurdle rates than those with less risk.

Hurdle rates can be applied in various contexts—they are most commonly used in financial strategies, such as discounted cash flow analysis, and by businesses and investors to evaluate projects.