# Required Rate of Return

## What is Required Rate of Return?

The **required rate of return** is the minimum level of return that an investor expects to receive on an investment. It represents the amount of risk that the investor is willing to take in order to achieve a certain level of return, and is used to evaluate the potential return of different investment opportunities.

The required rate of return is typically expressed as a percentage and is used to calculate the present value of an investment. The present value is the value of an investment today, based on the expected future cash flows and the required rate of return. The higher the required rate of return, the lower the present value of the investment.

The required rate of return can be influenced by a variety of factors, including the level of risk associated with the investment, the investor's risk tolerance, and the returns available on alternative investment opportunities. It is an important concept in finance, as it helps investors to understand the trade-offs between risk and return and to make informed decisions about where to invest their capital.

## See Also

- Rate of Return (RoR)
- Internal Rate of Return (IRR)
- Return on Assets (ROA)
- Return Over Time (ROT)
- Return on Capital (ROC)
- Return on Capital Employed (ROCE)
- Return on Equity (ROE)
- Return on Invested Capital (ROIC)
- Return on Investment (ROI)
- Return on Marketing Investment (ROMI)
- Return on Net Assets (RONA)

## References

## Popular Articles

- Personnel Management
- Architecture Development Method (ADM)
- IT Operating Model
- Strategic Intent
- Data Governance
- Business Capability
- IT Strategic Plan (Information Technology Strategic Plan)
- IT Ecosystem
- Information Technology (IT)
- International Accounting Standards Board (IASB)
- Economic Value Added (EVA)
- Strategic Business Unit
- Business Process Architecture
- Configuration Item (CI)
- IT Operations Management (ITOM)
- Organizational Goals
- Business Process Engineering (BPE)