Benchmarking Data on WACC, Hurdle Rates and Capital Allocation Practices

The 2026 AFP® Cost of Capital Survey Report provides benchmarking data from 295 treasury and finance practitioners on how organizations calculate, adjust and govern cost of capital in practice.

If you are reviewing your weighted average cost of capital (WACC) assumptions, validating your hurdle rate policy or reassessing discount rate inputs, this report shows how your approach compares to peer organizations.

You must be an AFP member to access the comprehensive report. Non-members can join AFP for access, or purchase the report for $295.

Explore: Companion Webinar (April 16) | Benchmarking Cost of Capital in Practice | How Organizations Calculate Weighted Average Cost of Capital (WACC) | Hurdle Rate Policy: How Companies Set Investment Thresholds | Application in Capital Budgeting and Valuation | Who Should Download This Report? | Press Information

Benchmarking Cost of Capital in Practice

Cost of capital represents the minimum rate of return organizations are required to earn to create value — but the mechanics behind calculating and applying it vary widely across organizations.

This report benchmarks:

• How organizations calculate the variables included in the calculation of WACC.
• How cost of debt and cost of equity are estimated
• Whether firms use book or market capital structure
• How organizations manage risk/uncertainty in projections
• How frequently WACC is updated
• How cost of capital is communicated internally

If you are evaluating how to calculate cost of capital within your organization, this data provides real-world comparison points.

How Organizations Calculate Weighted Average Cost of Capital (WACC)

Weighted average cost of capital (WACC) sits at the center of capital budgeting and valuation models. Yet the way companies determine WACC — and how often they revisit it — differs significantly.

The report benchmarks:

• Departments responsible for WACC calculation
• Validation of calculation with external parties
• Trends and developments factored into estimations
• Regulatory considerations impacting WACC
• Instruments used to estimate risk-free rates
• Sources used for Beta factor
• Determination of weighting factors for debt and equity

If you are reviewing your weighted average cost of capital calculation or pressure-testing your WACC methodology, this report provides peer comparisons grounded in current practice.

Hurdle Rate Policy: How Companies Set Investment Thresholds

A hurdle rate establishes the minimum acceptable return for approving investments. While many organizations anchor hurdle rate to cost of capital, policy design and adjustment practices vary.

According to the survey:

• 62% of organizations use calculated cost of capital as their standard hurdle rate
• 38% set a hurdle rate above cost of capital

The report further benchmarks:

• When companies adjust hurdle rates in evaluating investments
• How organizations respond to market volatility

If you are evaluating whether your investment hurdle rate is appropriately calibrated, this data provides objective context.

Application in Capital Budgeting and Valuation

Beyond calculation mechanics, the report examines how cost of capital and hurdle rate are applied in decision-making frameworks.

Benchmarking insights include:

• Use of discounted cash flow (DCF) models
• Prevalence of IRR, NPV and ROI in capital allocation
• Terminal value modeling practices
• Cash flow horizon selection
• Modeling Used for Cash Flows
• External validation of cost of capital assumptions

Over 80% of organizations report using DCF and CAPM in evaluating investments — but the inputs, governance structures and update frequency differ meaningfully.

If you are reviewing your IRR hurdle rate comparison process or reassessing discount rate application, this report offers practical benchmarks.

Who Should Download This Report?

This benchmarking report is designed for finance professionals responsible for capital allocation, valuation and return thresholds — including those who:

• Set or approve hurdle rates for capital projects, M&A or strategic investments
• Calculate weighted average cost of capital (WACC) and manage capital structure decisions
• Build DCF, IRR and NPV models to evaluate investment opportunities
• Determine cost of debt and cost of equity inputs, including risk-free rate and beta
• Compare IRR vs hurdle rate to assess investment viability
• Adjust WACC or hurdle rates for market volatility or geopolitical risk
• Evaluate opportunity cost of capital and capital budgeting trade-offs
• Validate cost of capital assumptions with banks or consultants
• Communicate cost of capital and return expectations to executives and boards

If your role involves determining how to calculate weighted average cost of capital — or aligning hurdle rate and discount rate policy — this report provides empirical data to inform those decisions.

Press Information

Press Release: AFP Survey Finds 1 in 2 Organizations Adjust Hurdle Rates in Response to Market Volatility, Geopolitics and Regulation

If you are interested in referencing data from this report in marketing materials, etc. please contact Anissa Holm, Research Manager. 

Contact [email protected] or call 301.907.2862 for more in-depth information, to read the full report or to arrange an interview with AFP Research.

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Questions about this subject

Contact Tom Hunt, CTP, 
AFP's Director of Treasury Practice