WRITE a short note on “Cut-off Rate”.
CA Intermediate · Financial Management and Strategic Management · MTP · May 2024
WRITE a short note on “Cut-off Rate”.
Suggested Answer and Working Notes:
Cut-off Rate: It is the minimum rate which the management wishes to have from any project. Usually this is based upon the cost of capital. The management gains only if a project gives return of more than the cut-off rate. Therefore, the cut-off rate can be used as the discount rate or the opportunity cost rate.
Topics: Part-A: Financial Management
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