Setting a Project Hurdle Rate
A first-round question on how corporate finance teams screen investment proposals.
What is a hurdle rate, and should every project at a company use the same one?
4 questions reported in 3M interviews, organised by the group that asks them. Every question carries a model answer and graded feedback on your own attempt.
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Model builds
Built in the spreadsheet grid
Project selection, returning capital and measuring per-share value. 3 questions
A first-round question on how corporate finance teams screen investment proposals.
What is a hurdle rate, and should every project at a company use the same one?
A senior analyst case assessing whether a portfolio review recommendation considers cash, stranded costs and opportunity cost rather than headline multiples.
A conglomerate can sell a non-core division for $600m. The division generates $55m of annual EBITDA, requires $25m of capex and uses $80m of working capital. How would you decide whether to sell it?
A CFO case in which a cost programme must improve near-term liquidity without impairing the recovery.
A company must improve cash flow by $80m this year after demand softens. The CEO proposes an across-the-board 10% operating-expense cut. How would you build a better plan?
Adjacency analysis, competitive response and where advantage actually comes from. 1 question
Asked at diversified companies deciding where to invest or divest.
How would you run a portfolio review across several business units?
Write your answer, get it graded on technical accuracy, completeness and communication, and see exactly which mechanic you missed.
Company tags reflect where a question type is commonly reported in interviews. They are not sourced from, endorsed by, or affiliated with 3M.