When specifying the minimum attractive rate of return (MARR): a. Use the value 10%, as it is an easy multiple to work with b. Exercise caution in calculating it, as once it is defined, you can use it indefinitely for all future investments c. Ensure that it reflects the opportunity cost associated with investing in the candidate alternative as opposed to investing in other available alternatives d. Calculate the weighted average cost of capital(WACC) to establish the upper bound on the MARR.
When specifying the minimum attractive rate of return (MARR): a. Use the value 10%, as it is an easy multiple to work with b. Exercise caution in calculating it, as once it is defined, you can use it indefinitely for all future investments c. Ensure that it reflects the opportunity cost associated with investing in the candidate alternative as opposed to investing in other available alternatives d. Calculate the weighted average cost of capital(WACC) to establish the upper bound on the MARR.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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