Minimum acceptable rate of return
What is a minimum acceptable rate of return (MARR)?
A minimum acceptable rate of return (MARR) is the minimum profit an investor expects to make from an investment, taking into account the risks of the investment and the opportunity cost of undertaking it instead of other investments.
Where have you heard about minimum acceptable rates of returns (MARR)?
If you've done any research and cost analysis before making an investment, you've probably worked out the minimum acceptable rate of return. Minimum acceptable rates of return are also known as hurdle rates, cut-off rates or benchmarks.
What you need to know about minimum acceptable rates of returns (MARR).
MARRs are a useful way of weighing up whether an investment is worth the risks associated with it. To calculate the MARR, you need to look at different aspects of the investment opportunity, including the opportunities for expanding operation and rate of return on investments.
An investment has been a successful one if the actual rate of return is above the minimum acceptable rate of return. If it is below, it's seen as an unsuccessful investment and you might, as an investor, pull out of the investment.