Required rate of return multiplied by the investment is the imputed cost of the investment.

Question

Quizplus · Accepted Answer

The imputed cost of an investment is the cost that would have been paid if the funds used for the investment were not used for that purpose but instead used for their next-best alternative. The required rate of return is the minimum return an investor expects to receive for the investment to compensate for the time and risk associated with it. Multiplying the required rate of return by the investment amount gives the imputed cost of the investment.

Required Rate of Return Multiplied by the Investment Is the Imputed