The Rate of Return Specified as the Lowest Acceptable Return

question 164

Short Answer

The rate of return specified as the lowest acceptable return on an investment is referred to as the ________________________________.

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Definitions:

Internal Rate of Return

A financial metric used to evaluate the profitability of potential investments, calculating the discount rate at which the net present value of costs and benefits of an investment equals zero.

Capital Budgeting

The procedure of assessing and choosing long-term investment opportunities that align with the objective of maximizing shareholder wealth.

Net Present Value

A financial metric that calculates the value of a projected future cash flows relative to the initial investment, considering the time value of money.

Break-Even Time

The period required for a business to generate enough revenue to cover its total costs, reaching a financial state where profit and loss are exactly balanced.