The minimum required rate of return is a weighted average of the firm's cost of various sources of capital.

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The minimum required rate of return, also known as the cost of capital, is calculated using a weighted average of the costs of different sources of capital such as debt, equity, and preferred stock. This helps determine the minimum return the company needs to earn on its investments in order to satisfy its investors and maintain or increase its stock price.

The Minimum Required Rate of Return Is a Weighted Average