What is the meaning of MARR in the economy

Minimum Acceptable Rate of Return (MARR) in the economy is known as Minimum Acceptable Rate of Return (MARR), the Chinese meaning is the minimum acceptable rate of return also known as the minimum return on capital, the minimum return on capital refers to the investor's requirements for the minimum capital investment rate, only to achieve this minimum standard, investors are willing to invest in the discounted cash flow method, the minimum return on capital. As a decision maker to consider a project _欠裰档猛蹲实闹副曛一, if the return on an investment is higher than the minimum rate of return on capital, the investment is worthwhile, if it is lower than the minimum rate of return on capital, the project should be abandoned because it will lead to investor losses, usually the minimum rate of return on capital for the company's cost of capital or the average cost of capital weighted by the cost of capital plus a risk premium, reflecting the specific investment projects The minimum return on capital is also known as the required rate of return.

I. Calculation of the rate of return

Return on investment = annual profit or average annual profit/total investment x 100%, return on investment is the value that should be returned through the investment, i.e., the economic return that the enterprise receives from an investment activity. It covers the profitability objectives of the business. Profit is related to the property necessary to invest in the business, as managers must make a profit from their investments and existing property. Investment can be divided into two categories: industrial investment and financial investment, what people usually call financial investment mainly refers to securities investment, because risk premium = (average return on risky assets - risk-free return) * β, so the necessary rate of return = risk-free return + (average return on risky assets without risky return) * β, the necessary rate of return is the rate of return of the other alternatives with the same risk as the same risk of financial securities.

2, the explanation of the necessary return

1, the necessary rate of return and coupon rate, the actual rate of return, the expected rate of return (yield to maturity) is not the same level of concepts in the issuance of bonds, coupon rate is based on the necessary rate of return of equal-risk investment is determined by the necessary rate of return, the necessary rate of return is the rate of return required by the investor for the equal-risk investment, which accurately reflects the risk of future cash flows The remuneration, also known as people are willing to invest in the minimum rate of return necessary to earn, in a fully efficient market in the expected rate of return of the security is its necessary rate of return;

2, coupon rate, the necessary rate of return have a real interest rate (cyclical interest rate) and the nominal interest rate (offer interest rate) of the division, where interest rates, can be divided into nominal and real;

3, in order to facilitate the Comparison of different bonds, the need to quote the interest rates of different interest-bearing periods collectively - converted to annualized interest rate conversion, the quote rate according to the actual periodic interest rate multiplied by the number of times a year of compounding, has formed a practice.