Required return意思

"Required return" is a term used in finance and investing, specifically in the context of capital budgeting and investment analysis. It refers to the minimum rate of return that an investment project must achieve in order to be considered acceptable for investment. This rate is also known as the hurdle rate or the minimum acceptable rate of return (MARR).

The required return is typically calculated based on the risk-free rate (the return on a low-risk investment, such as a government bond) plus a risk premium, which reflects the additional risk associated with the investment project. The risk premium is determined by factors such as the project's specific risks, the company's cost of capital, and the investor's required rate of return.

Investment projects are evaluated using techniques such as net present value (NPV), internal rate of return (IRR), and payback period. The required return is used as a benchmark to assess whether the projected returns from a project are sufficient to justify the investment. If the projected returns are less than the required return, the project is considered too risky or not profitable enough and may be rejected.