cut-off point

the cut off point refers to the point below which a project would not be accepted. For Example. if 10% is the desired rate of return, the cut-off rate is 10%. The cut-off point may also be in terms of period. For example, if the management desires that the investment in the project should be recouped in 3 years , the period of three years would be taken as the cut-off point. A project, incapable of generating necesaary cash to pay for the initial investment in the project within three years will not be accepted.