Cutoff point

The cutoff point is the minimum rate of return at which a capital investment proposal will be accepted. The cutoff point increases when the perceived risk level of an investment is high, and declines when the risk level is low. Under no circumstances should an investment be made which generates a return lower than the corporate cost of capital, since doing so will result in a negative return for the business.

Related Courses

Capital Budgeting 
Fixed Asset Accounting