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Accept-Reject Criterion 

In pay hack period can be used as a decision criterion to accept or reject investment proposals. One application of this technique is to compare the actual pay back with a predetermined pay back, rho is, the pay hack set up’by the management in terms of the maximum period during which the initial investment must be recovered. If the actual pay back period is less than the predetermined pay back, the project would be accepted; if not, it would be rejected. Alternatively, the pay back can be used JS a ranking method.w’hen mutually exclusive ‘projects are under consideration, they may be .ranked according to the length of the pay hack period. Thus, the. project having the shortest pay back may be assigned rank one, followed in that order so that the project with the longest pay back would he ranked last. Obviously, projects with shorter pay back period will he selected.

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