0
What else can I help you with?
What is the difference between the required rate of return and the expected rate of return in investment analysis?
The required rate of return is the minimum return an investor needs to justify the risk of an investment, while the expected rate of return is the return that an investor anticipates receiving based on their analysis of the investment's potential performance.
What is minimum rate of return?
It is the lowest return on project or investment that will make the firm or investor to accept that project.
How does a change in the required rate of return affect project's Internal Rate Of Return?
A change in the required rate of return will affect a project's Internal Rate of Return (IRR) by potentially shifting the project's feasibility. If the required rate of return increases, the project's IRR needs to be higher to be considered acceptable. Conversely, a decrease in the required rate of return could make the project's IRR more attractive.
When a corporation weighs its return on investment for initiating a new project against the minimum standard investment return it has set before it the minimum standard investment return is referred t?
Hurdle rate
What are two other terms that are used interchangeably with the term 'cost of capital'?
Two terms often used interchangeably with 'cost of capital' are 'required return' and 'hurdle rate.' The required return refers to the minimum return an investor expects to earn for taking on the risk of an investment. The hurdle rate is the minimum acceptable return rate that a project must achieve to be considered worthwhile.
What is the cut off point for accounting?
Businesses attempt to estimate the possible income received by certain transactions. They then compare this amount to the necessary rate of return on the investment. Every investment has a necessary return (usually enough so the company doesn't lose money in the investment). The cutoff point, therefore, is the minimum rate of return. If a company invests in something with a projected 15% rate of return, but the minimum rate of return is 20%, then the company is better off not investing.
How can I get better in money market checking?
Many money market accounts have a minimum dollar amount to achieve a minimum rate of return. The maximum rate of return will differ from site to site but should be clearly explained in the application process. Read the application carefully.
How do you calculate minimum Required Rate of Return?
The minimum Required Rate of Return should be calculated by looking at the rate of return that would be gained by putting money in a savings accounts that accrues interest at the current rate. If you investment is not projected to make more profit than that it does not meet the minimum Required Rate of Return.
What is the relationship between required rate of return and coupon rate on the value of bond?
The relationship between the required rate of return and the coupon rate significantly affects a bond's value. If the required rate of return is higher than the coupon rate, the bond will typically trade at a discount, as investors seek higher yields elsewhere. Conversely, if the required rate of return is lower than the coupon rate, the bond will trade at a premium, since it offers more attractive returns relative to current market rates. Thus, changes in the required rate of return directly influence the bond's market price.
The cost of equity and the required rate of return are equal to what?
The cost of equity is the return that investors expect for holding a company's equity, reflecting the risk of the investment. The required rate of return is the minimum return an investor expects to earn from an investment, compensating for its risk. In essence, the cost of equity and the required rate of return are equal as they both represent the expected return that justifies the risk taken by investors in equity securities.
How would you describe the cost of capital?
The minimum rate of return the company must earn to be willing to make the investment. It is the rate of return the company could earn if, rather than making the capital investment, it invested the money in an alternative, but comparable, investment.
Where are the highestrates for CD / what bank?
Discover Bank currently offers a return of 3.7% on a minimum $2,500 investment for a 5-year CD rate.
