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Finance Dictionary and Glossary of Investment Terms
hurdle rate
Definition 1.
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.
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Definition 2.
The minimum amount of return that a person requires before they will make an investment in something.
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Definition 3.
The required return in capital budgeting. For example, if a project has an expected rate of return higher than the hurdle rate, the project may be accepted.
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