Enter the cost of capital (%) and the risk premium (%) into the Hurdle Rate Calculator. The calculator will evaluate the Hurdle Rate.

Hurdle Rate Formula

The following two example problems outline the steps and information needed to calculate the Hurdle Rate.

HUR = CC + RP
• Where HUR is the Hurdle Rate (%)
• CC is the cost of capital (%)
• RP is the risk premium (%)

To calculate a hurdle rate, sum the cost of capital by the risk premium.

How to Calculate Hurdle Rate?

The following example problems outline how to calculate Hurdle Rate.

Example Problem #1:

1. First, determine the cost of capital (%).
• The cost of capital (%) is given as: 3.
2. Next, determine the risk premium (%).
• The risk premium (%) is provided as: 5.
3. Finally, calculate the Hurdle Rate using the equation above:

HUR = CC + RP

The values provided above are inserted into the equation below and computed.

HUR = 3 + 5 = 8.00 (%)

Example Problem #2:

For this problem, the variables required are provided below:

cost of capital (%) = 5