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Cutoff period is a term in finance. In capital budgeting , it is the period (usually in years) below which a project's payback period must fall in order to accept the project. Generally it is the time period in which a project gives its investment back if a project fails to do so the project will be rejected.
In business and for engineering economics in both industrial engineering and civil engineering practice, the minimum acceptable rate of return, often abbreviated MARR, or hurdle rate is the minimum rate of return on a project a manager or company is willing to accept before starting a project, given its risk and the opportunity cost of forgoing other projects. [1]
An economic theory that defines wealth by the amount of precious metals owned. [48] business cycle. Also called the economic cycle or trade cycle. The downward and upward movement of gross domestic product (GDP) around its long-term growth trend. [49] The length of a business cycle is the period of time containing a single boom and contraction ...
The cutoff grade can be determined through a variety of methods, each of varying complexity. Cutoff grades are selected to achieve a certain objective, such as resource utilization or economic benefit. Dividing these objectives even further gives way to specific goals such as the maximization of total profits, immediate profits, and present value.
Payback period in capital budgeting refers to the time required to recoup the funds expended in an investment, or to reach the break-even point. [1]For example, a $1000 investment made at the start of year 1 which returned $500 at the end of year 1 and year 2 respectively would have a two-year payback period.
A time-series path in the neoclassical model is a series of these one-period utility maximizations. In contrast, a recursive model involves two or more periods, in which the consumer or producer trades off benefits and costs across the two time periods. This trade-off is sometimes represented in what is called an Euler equation.
As periods of economic stagnation are painful for the many who lose their jobs, there is often political pressure for governments to mitigate recessions. Since the 1940s, following the Keynesian Revolution , most governments of developed nations have seen the mitigation of the business cycle as part of the responsibility of government, under ...
Over a short time period (few months), most costs are fixed costs as the firm will have to pay for salaries, contracted shipment and materials used to produce various goods. Over a longer time period (2-3 years), costs can become variable. Firms can decide to reduce output, purchase fewer materials and even sell some machinery.