A company's required rate of return, typically its cost of capital, is called the:
A) Internal rate of return.
B) Hurdle rate.
C) Average rate of return.
D) Maximum rate.
E) Payback rate.

Question

Quizplus · Accepted Answer

The required rate of return for a company, which is the minimum rate of return needed to justify an investment, is known as the hurdle rate. It is also known as the cost of capital, reflecting the cost of funds that a company uses to finance its projects. The other options mentioned are either incorrect or not relevant to the given question.

A Company's Required Rate of Return, Typically Its Cost of Capital