cut-off rate

cut-off rate

the minimum rate of return used in INVESTMENT APPRAISAL for the purpose of deciding if an investment project is to go ahead. A predetermined arbitrary cut-off rate may be used in place of the COST OF CAPITAL as the DISCOUNT RATE. Different cut-off rates may be employed for projects with different degrees of riskiness. See DISCOUNTED CASH FLOW.
Collins Dictionary of Business, 3rd ed. © 2002, 2005 C Pass, B Lowes, A Pendleton, L Chadwick, D O’Reilly and M Afferson
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