The Required Rate of Return Is the Rate of Return

question 80

True/False

The required rate of return is the rate of return that the firm forgoes by investing in a particular project rather than investing in an alternative project of comparable risk.

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Definitions:

Required Return

The minimum profit or yield that investors expect to earn on an investment.

Unit Product Cost

The cost to produce a single unit of product, accounting for direct materials, direct labor, and overhead on a per-unit basis.

Absorption Costing

An accounting method that includes all direct costs and fixed and variable overhead costs in the cost of a product.

Required Return

The minimum rate of return needed from an investment to make it worthwhile for the investor.