How do you find the minimum required rate of return?

To calculate RRR using the CAPM:

1. Subtract the risk-free rate of return from the market rate of return.
2. Multiply the above figure by the beta of the security.
3. Add this result to the risk-free rate to determine the required rate of return.

How do I calculate RRR in Excel?

Required Rate of Return = (Expected Dividend Payment / Current Stock Price) + Dividend Growth Rate

1. Required Rate of Return = (2.7 / 20000) + 0.064.
2. Required Rate of Return = 6.4 \%

What is the minimum rate of return also called?

hurdle rate
The hurdle rate, also called the minimum acceptable rate of return, is the lowest rate of return that the project must earn in order to offset the costs of the investment.

What is the required rate of return on equity?

The required rate of return for equity is the return a business requires on a project financed with internal funds rather than debt. The required rate of return for equity represents the theoretical return an investor requires for holding the firm’s stock.

What is the required rate of return on a bond?

The required rate of return on a bond is the interest rate that a bond issuer must offer in order to get investors interested. Required returns are predominantly set by market forces and determined by the price at which issuers and investors agree.

Is the minimum required rate of earnings for the cut of rate of capital expenditure?

According to Ezra Solomon, ‘the cost of capital is the minimum required rate of earnings or the cut-off rate of capital expenditure’.

Is the minimum required rate of earnings or the cut off rate of capital expenditure?

Cost of capital
According to Solomin Ezra: “Cost of capital is the minimum required rate of earning or the cut- off rate of capital expenditure.” According to Jhon J: “The rate of return the firm requires from investment in order to increase the value of the firm in then market place.”

What is a reasonable rate of return during retirement?

That said, a rate of return of 4-5\% is a reasonable goal when looking back at the historic returns the markets have given investors. If, however, you think you need to achieve a rate of return that’s closer to 7-8\%, that will be more difficult to achieve.