Capital Investment Hurdle Rate
Capital Investment Hurdle Rate: A Key Decision-Making Tool
The hurdle rate is a critical tool in capital budgeting, serving as the minimum acceptable rate of return a company requires from a proposed investment project. Think of it as the “minimum acceptable bar” a project needs to clear to be considered worthwhile. Essentially, if a project’s projected return is below the hurdle rate, it’s rejected; if it’s at or above, it warrants further consideration.