The risk-adjusted discount rate (RADR) is the rate of return that must be earned on a given project to compensate a firm's owners adequately, that is, to maintain or improve the firm's share price.

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The risk-adjusted discount rate takes into account the level of risk involved in a given project and is used to determine the minimum return needed to compensate a firm's owners for the risk they are taking. Maintaining or improving the firm's share price is one of the main goals of using the RADR.

The Risk-Adjusted Discount Rate (RADR) Is the Rate of Return