The minimum annual acceptable rate of return on an investment is the ________.
A) accrual accounting rate of return
B) hurdle rate
C) internal rate of return
D) net present value

Question

Quizplus · Accepted Answer

The hurdle rate, also known as the minimum required rate of return, is the lowest acceptable rate of return on an investment. It is the rate at which an investor would be indifferent between investing in a project and investing in an alternative investment with similar risk. Therefore, B is the correct choice. The accrual accounting rate of return, internal rate of return, and net present value are all methods of evaluating the profitability of an investment, but they do not directly relate to the minimum acceptable rate of return.

The Minimum Annual Acceptable Rate of Return on an Investment