The hurdle rate is the minimum required rate of return on an investment or project that a company must achieve to consider it worthwhile. This benchmark is critical for capital budgeting decisions, as it helps businesses assess whether a project will generate enough returns to justify the risks and costs involved. The hurdle rate often includes the cost of capital and reflects the risk associated with the investment, guiding firms in making informed financial decisions.
congrats on reading the definition of Hurdle Rate. now let's actually learn it.