Description: The hurdle rate is a key concept in finance and project management that refers to the minimum acceptable return on an investment. This indicator is used to assess the viability of a project, establishing a threshold that must be exceeded for the investment to be considered profitable. In practical terms, the hurdle rate helps project managers make informed decisions about resource allocation and prioritization of initiatives. It is calculated taking into account factors such as the cost of capital, the risk associated with the project, and return expectations. A higher hurdle rate indicates a greater level of risk or a more ambitious return expectation, while a lower rate may reflect a safer project or one that is less demanding in terms of performance. This concept is fundamental for strategic planning, as it allows organizations to evaluate and compare different projects, ensuring that resources are directed toward those that offer the best potential return. In various development environments, the hurdle rate can also influence the prioritization of features and functionalities, helping teams focus on tasks that will generate the most value for the business.
