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How is an organization's hurdle rate determined? What is the relationship between the hurdle rate and capital budgeting decision making? Are there any circumstances in which it makes sense to accept a capital budgeting project that does not meet the hurdle rate? Explain your answer.

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How is an organization's hurdle rate determined are examined. The expert compares it to capital budgeting.

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"The hurdle rate is usually determined by evaluating existing opportunities in operations expansion, rate of return for investments, and other factors deemed relevant by management."

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Sandeep Bardia, MBA
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  • BCom, SGTB Khalsa College, University of Delhi
  • MBA, Rochester Institute of Technology
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