What term describes "management's minimum desired rate of return on an investment"?

The term that describes "management's minimum desired rate of return on an investment" is the discount rate. This is a critical concept in capital budgeting and financial decision-making, as the discount rate reflects the opportunity cost of investing capital elsewhere. It represents the minimum return that management expects to earn when evaluating potential investments.

When assessing projects, management uses the discount rate to determine the present value of future cash flows generated by the investment. If the calculated return on the project is greater than the discount rate, it indicates that the investment is expected to add value and be worthwhile. Conversely, if the return is below the discount rate, the project may be deemed unworthy of the investment.

Understanding the discount rate is essential for making informed financial decisions, as it influences the evaluation of risk, the cost of capital, and the overall investment strategy for the organization.