Rate of Return On Capital
The "rate of return on capital" is taken into account when determining the demand for loanable funds. This is the additional revenue that a firm can earn from its employment of new capital, and is usually measured as a percentage rate per unit of time, which is why it is called the rate of return on capital. As long as the rate of return on capital is greater than or equal to the interest rate on paid on funds borrowed, firms will continue to demand loanable funds.
Read more about this topic: Loanable Funds
Famous quotes containing the words rate, return and/or capital:
“This is the essential distinction—even opposition—between the painting and the film: the painting is composed subjectively, the film objectively. However highly we rate the function of the scenario writer—in actual practice it is rated very low—we must recognize that the film is not transposed directly and freely from the mind by means of a docile medium like paint, but must be cut piece-meal out of the lumbering material of the actual visible world.”
—Sir Herbert Read (1893–1968)
“Yet I shall never return to the past, that attic.”
—John Ashbery (b. 1927)
“Imperialism is capitalism at that stage of development at which the dominance of monopolies and finance capitalism is established; in which the export of capital has acquired pronounced importance; in which the division of the world among the international trusts has begun, in which the division of all territories of the globe among the biggest capitalist powers has been completed.”
—Vladimir Ilyich Lenin (1870–1924)