# Hurdle Rate

*Corporate Finance & M&A — Finicade finance glossary*

A hurdle rate is the minimum return a project must clear to be approved, usually the cost of capital plus a margin for risk. Setting it too high starves the business of good projects; too low and value is destroyed with a spreadsheet's blessing. In private equity funds the phrase means something different — the preferred return investors receive before the manager takes carried interest.

**Also known as:** required rate of return, minimum acceptable rate

**Related terms:** [WACC](https://finicade.com/glossary/wacc), [IRR (Internal Rate of Return)](https://finicade.com/glossary/irr), [NPV (Net Present Value)](https://finicade.com/glossary/npv), [Capital Budgeting](https://finicade.com/glossary/capital-budgeting), [Opportunity Cost](https://finicade.com/glossary/opportunity-cost)

Source: https://finicade.com/glossary/hurdle-rate