The minimum rate of return on an investment is also known as a
A)hurdle rate.
B)payback rate.
C)net present value.
D)profit margin.

Question

Quizplus · Accepted Answer

The minimum rate of return on an investment is commonly referred to as the hurdle rate. This is the minimum return that an investment must generate in order to be considered viable. The hurdle rate is usually determined by a company's cost of capital, which takes into account the cost of borrowing money or obtaining financing for investments. Therefore, option A is the correct choice. Option B is incorrect because the payback rate refers to the amount of time it takes to recoup the initial investment in a project. Option C is also incorrect because net present value (NPV) is a formula used to calculate the present value of an investment's cash inflows and outflows, taking into account the time value of money. Option D is incorrect because profit margin refers to the percentage of revenue that represents a company's profit after subtracting expenses.

The Minimum Rate of Return on an Investment Is Also