Natural Interest Rate

Marginal Efficiency of Capital (MEC)
The Marginal Efficiency of Capital (MEC) is the annual percentage yield earned by the last additional unit of capital. It is crucial for determining the profitability of investment projects. Also known as marginal productivity of capital, natural interest rate, net capital productivity, and rate of return over cost, MEC indicates which projects exceed the market rate of interest and are thus profitable to undertake.

Accounting Terms Lexicon

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