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Hurdle Rate
Definition
The minimum required rate of return that a company expects from an investment, initiative, or project in order for it to be approved. In CPG, hurdle rates are used to evaluate marketing spend, trade promotions, and capital investments.
How It's Calculated
Example
A brand evaluates a national promotion and determines it must deliver at least a 15% return on investment to meet the company’s hurdle rate before approving the spend.
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