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cost of capital
(redirected from Required rate of return)

   Also found in: Medical, Financial, Acronyms, Wikipedia 0.01 sec.
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Noun1.cost of capital - the opportunity cost of the funds employed as the result of an investment decision; the rate of return that a business could earn if it chose another investment with equivalent risk
opportunity cost - cost in terms of foregoing alternatives


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Alternatively, earnings can be converted to value by dividing them by a capitalization rate, which encompasses the required rate of return and the anticipated long-term growth rate.
As such, 50% of A's capital is debt and 50% is equity Let's assume that the required rate of return on the equity is 30% (for an explanation, see "Required Rate of Return" below) and the average rate of interest charged by interest-bearing debt providers is 8%.
Mr Rudgard said: "The market for pub acquisitions remains competitive and we continue to make the point, and I think it is worth repeating, that we are only prepared to buy properties which at least match our required rate of return.
 
 
 
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