Adequacy of Rate or Return

The general norms for financial desirability are as follows: (i) Internal rate of return, 15 per cent, (ii) return on investment, 20-25 per cent after tax, (iii) debt service coverage ratio, 1.5 to 2. In applying these norms, however, a certain degree of flexibility is shown on the basis of the nature of the project, the risks inherent in the project, and the status of the promoter.

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