Required return is the rate of return that is necessary to attain so as to compensate the investors for taking risks on the individual investments that they have made. It is the minimum gain that is anticipated by the investors. The risk premium may be determined by comprehending business risks as well as financial risks.
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3. Estimate of the Required Return
WACC- 12%, worth of proposed plant- $U.S.800 million
Note: In an investment decision in finance, the general required rate of return is the weighted average cost of capital.