HURDLE RATE Definition

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HURDLE RATE is a term used in the budgeting of capital expenditures meaning the REQUIRED RATE OF RETURN in a DISCOUNTED CASH FLOW analysis. If the expected rate of return on an investment is below the hurdle rate, the project is not undertaken. The hurdle rate should be equal to the INCREMENTAL COST OF CAPITAL.

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AFFILIATE is a relationship between two companies when one company owns substantial interest, but less than a majority of the voting stock of another company, or when two companies are both subsidiaries of a third company.

CORE COMPETENCY is a specific factor that a business believes as being central to the way it, or its employees work. A core competency normally fulfils three key criteria:

  • It provides customer benefits
  • It is not easy for competitors to imitate or duplicate
  • It can be leveraged widely to many products and markets.

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