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:

- First, determine the cost of capital (%).
- The cost of capital (%) is given as: 3.

- Next, determine the risk premium (%).
- The risk premium (%) is provided as: 5.

- 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

risk premium (%) = 6

Test your knowledge using the equation and check your answer with the calculator..

HUR = CC + RP** = ?**