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What is the minimum required rate of return Formula?

Required Rate of Return is calculated using the formula given below Required Rate of Return = Risk Free Rate + Beta * (Whole Market Return - Risk Free Rate) Required Rate of Return = 5% + 1.3 * (7% - 5%) Required Rate of Return = 7.6%

How do you calculate the return rate?

The rate of return can be calculated in two ways: average rate or compound rate. The average rate is best used to measure how investments perform in the short term. It is calculated by figuring the mean return over the period of time in question, and dividing by the number of years in question.

What is the simple rate of return method?

The simple rate of return method is another capital budgeting technique that does not involve discounted cash flows. The method is also known as the accounting rate of return, the unadjusted rate of return, and the financial statement method.

What is the formula for real rate of return?

The real rate of return formula is the sum of one plus the nominal rate divided by the sum of one plus the inflation rate which then is subtracted by one. The formula for the real rate of return can be used to determine the effective return on an investment after adjusting for inflation.


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