Hurdle Rate of Return

The hurdle rate of return is the desired (or minimum) rate of return that is set to evaluate investments or projects. The hurdle rate of return is used to discount the various cash flows in the net present value method. The hurdle rate of return may be adjusted (increased) to reflect risk or to compensate for expected inflation. Different rates may be used for different time periods. See also net present value method and internal rate of return method.