IndigoLearn

Forums

All Topics Accountancy Auditing Corporate & Other Laws Direct Taxation Indirect Taxation Financial Management Economics Costing Strategic Management Maths & Stats Exams Others AFM Financial Reporting CFA Level I

Management of receivables

Financial Management

How is the required rate of return an opportunity cost?

Swathi Krishna

CA Final

★ 8K+

23-Oct-20 12:51

392

Answers (2)

If you had deployed money elsewhere you will get minimum that much return - it is called internal hurdle rate. All investments ( in this case credit extended to debtors) must yield a minimum of that rate and hence opportunity cost is the required rate of return