03 / 15 · GLOSSARY
03 / 15MARRDificultad

Minimum Attractive Rate of Return

The minimum return you require from your investment. Below this threshold, it's better to put money in another alternative (bank, savings, etc.).

Analogía

It's like the minimum interest a bank would require. If your business doesn't beat that, better leave the money in savings.

Ejemplo numérico

High MARR = stricter, you reject more, but the ones that pass are solid. Low MARR = you accept more risk. For LATAM SMEs: 18–25% is reasonable. Opportunity cost (USD term deposit): 10%. Industry risk premium: 12%. → MARR = 22%. Your project must earn more than 22% to justify the risk.

Fórmula
MARR = Opportunity cost + Risk premium

When to use it

Before computing NPV or IRR. It's the most sensitive parameter in the analysis: a poorly calibrated MARR makes a bad project look good and vice versa.

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Definitions aligned with Blank & Tarquin, Engineering Economy, 8th edition — McGraw-Hill.