The adequate target rate for depicting financial terms
The adequate target rate illustrates the return of the investment sum. This way, the real interest due for a loan can be accounted for in course of the economic assessment. When using equity capital, this takes into account the "loss" of an interest that would have been achieved by investing on the capital market.
The adequate target rate is used in dynamic procedures for economic assessment. These are for instance the annuity and the equivalent energy price. The adequate target rate is relevant for calculation of the annuity factors, the mean value factors, and the replacement investment factors.