What is the minimum acceptable return on an investment known as?
Understand the Problem
The question is asking for the term used to describe the minimum acceptable return on an investment, which relates to investment metrics and financial terminology.
Answer
Hurdle rate.
The minimum acceptable return on an investment is known as the hurdle rate.
Answer for screen readers
The minimum acceptable return on an investment is known as the hurdle rate.
More Information
The hurdle rate is crucial for investment decisions as it helps in determining whether a project is worth pursuing based on its potential to generate sufficient returns.
Tips
Confusing the hurdle rate with the internal rate of return (IRR) can be a common mistake. The hurdle rate is a benchmark for returns, while the IRR is the actual return of the investment.
Sources
- Homework.study.com - homework.study.com
- Capital.com - capital.com
- Wikipedia - Minimum acceptable rate of return - en.wikipedia.org
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