With the help of the ARR. the financial decision maker can decide whether to accept or reject the investment proposal. As an accept-reject criterion, the actual ARR would be compared with a predetermined or a minimum required rate of return or cut-off rate. A project would qualify .to be accepted if’ the actual ARR is higher than the minimum desired ARR. Otherwise, il is liable to be rejected. Alternatively, the ranking method can be used to select or reject proposals. Thus, the alternative proposals under consideration may be arranged in the descending order of magnitude. starting with the proposal with the highest ARR and ending With the proposal having the lowest ARR. Obviously, projects having higher ARR would be preferred to projects with lower ARR.