Rate of return higher than interest rate
Riskier projects require higher rates of return. Plus, real estate investors are known for using mortgages, which are a form of leverage, to increase the return on their investment. The present low-interest-rate environment has resulted in some significant deviations in recent years, with investors accepting cap rates that are substantially Corporations use internal rate of return to evaluate share issues and stock buyback programs. A share repurchase proceeds if returning capital to shareholders has a higher internal rate of return than candidate capital investment projects or acquisition projects at current market prices.