The project's pre-tax minimum rate of return must equal which of the following:
A) Lender's interest - Shareholders' return
B) Lender's interest + Shareholders' return
C) Minimum cash flow x Investment
D) Minimum cash flow ∕ Investment

Question

Quizplus · Accepted Answer

The pre-tax minimum rate of return for a project is typically calculated as the minimum cash flow generated by the project divided by the initial investment. This ratio gives an idea of the return on investment before taxes are considered, making option D correct.

The Project's Pre-Tax Minimum Rate of Return Must Equal Which