required rate of return

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The rate of return, usually expressed as a percentage, that an organization determines is necessary before an investment can be regarded as profitable and therefore justified. In a discounted cash flow appraisal the required rate of return may be expressed as an internal rate of return and in other circumstances the return on capital employed or accounting rate of return may be regarded as appropriate. In general, it is better to estimate a range rather than a precise figure.

Subjects: Accounting.

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