A minimum acceptable rate of return for an investment decision is called the:
A) Internal rate of return.
B) Average rate of return.
C) Hurdle rate.
D) Maximum rate.
E) Payback rate.

Question

Quizplus · Accepted Answer

The minimum acceptable rate of return for an investment decision is called the hurdle rate. It represents the minimum return that the investor expects to achieve from the investment in order to justify the risk taken. The internal rate of return (A) is the rate at which the net present value of an investment is zero, the average rate of return (B) measures the average annual return over a period of time, the maximum rate (D) is not a relevant concept in this context, and the payback rate (E) measures the time it takes for an investment to recoup its initial cost.

A Minimum Acceptable Rate of Return for an Investment Decision