Required Return
The minimum annual RATE of return an investor demands to compensate for risk and illiquidity. Do not conflate it with a MULTIPLE: when a VC says 10-25x on an early-stage deal, that is a target multiple of invested capital over the whole holding period, which only becomes a rate once you fix the horizon (10x over 7 years is about 39%/yr). In a DCF, the required return on EQUITY is the cost of equity; the firm-level blended discount rate (WACC) also folds in the after-tax cost of debt -- use whichever matches the cash flows being discounted.
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Related terms
Absorption Rate · AFFO per Share · Allowed Return on Equity · Alternative Investments · Anchor Tenant · Assets Under Management
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