Hurdle Rate Definition

By CFI Team · Corporate Finance Institute · 2020 · CFE201-100-23

A Corporate Finance Institute guide to the hurdle rate, also known as the minimum acceptable rate of return (MARR): the minimum required or target rate of return that investors expect to receive on an investment. The page says the rate is determined by assessing the cost of capital, the risks involved, current business expansion opportunities, rates of return for similar investments, and other factors that could directly affect an investment.

On the syllabus

Exam CFE-201 — outcomes 1a, 1b.

What is a Hurdle Rate?

What are the Methods Used to Determine a Hurdle Rate?

What are the Factors to Consider when Setting a Hurdle Rate?

How to Use the Hurdle Rate to Evaluate an Investment

How Important is the Hurdle Rate in Capital Investments?

What are the Limitations of Using a Hurdle Rate?

Additional Resources

Sources

Hurdle Rate - Definition and Example (Corporate Finance Institute) — the document: title, author (CFI Team), publication date (March 5, 2020; the page was last modified in 2026, after the SOA's 2023 study-note code), opening definition and the section headings
CFE 201 Syllabus, Mar 2027/Jul 2027 (SOA) — the reading (CFE201-100-23: Hurdle Rate Definition) and its learning outcomes
CFE 201 Fall 2025 exam solutions (SOA) — identifies CFE201-100-23 as "CFI: Hurdle Rate – Definition and Example"