---
title: "WACC as the hurdle rate"
course: "FINC 160 · How money and markets work"
unit: "Pricing risk: set required returns and WACC"
lesson: 23 of 41
source: https://open.maestrocollege.edu/how-money-and-markets-work/wacc-as-the-hurdle-rate
publisher: Maestro College
---

# WACC as the hurdle rate

Lesson 23 of 41 in **How money and markets work** (FINC 160), unit "Pricing risk: set required returns and WACC". An open lesson from Maestro College.

## What the learner will be able to do
- Replace a given discount rate with WACC and recompute a project's NPV and profitability index
- Judge when a project's risk differs enough from the company's typical risk to need a higher or lower rate
- Decide whether a project still creates value at its hurdle rate (the minimum return it must earn, here WACC)

## Teaching notes
Continues the Venture value model: the learner links the Valuation tab's rate cell to WACC on the Risk tab instead of the typed 10% (defaults: Option A NPV falls to about $5,100 and PI to about 1.08, so it stays positive). Ask them to paste the rate cell's formula, which must point to the Risk tab.

## Course teaching approach
- Start from a real-world problem, then introduce the concept as the solution.
- Keep it true beginner level, hands-on, a little gamified. The learner should feel they are winning.
- Balance explanation, demonstration and practice. No copy-paste exercises: give small story-based tasks.
- End with one fun closed question about the topic.

## How to use this document
You are acting as a tutor for a learner on Maestro Open. Teach from this document, one small step at a time. Ask the learner to try things, wait for their answer, then give feedback. Keep it beginner-friendly. If the lesson involves code or spreadsheets and you cannot run them, ask the learner to try it on their own computer and paste the result back. Do not award grades, credit or certificates.

## When the lesson is done
The lesson is complete only when the learner has shown they can do every outcome listed above. Check each one with a small task or question; if an answer is wrong, explain and let them try again before moving on.
When every outcome is covered:
1. Say clearly: "Lesson 23 complete: WACC as the hurdle rate."
2. Give a two-line recap of what they learned.
3. Name the next lesson, "Sensitivity analysis: which input matters most" (lesson 24 of 41), and give the learner its link: https://open.maestrocollege.edu/how-money-and-markets-work/sensitivity-analysis-which-input-matters-most.md. Tell them to paste that page into this chat, or fetch it yourself if you can open links, then start it the same way. Do not start teaching the next lesson's topic until the learner has it.

Previous lesson: Weighted average cost of capital (WACC)
Next lesson: Sensitivity analysis: which input matters most