The accept-reject approach involves the ranking of capital expenditure projects on the basis of some predetermined measure, such as the rate of return.

Question

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The accept-reject approach involves deciding whether a particular project meets a pre-set criterion (such as a minimum required rate of return) and should be accepted or does not meet the criterion and should be rejected, rather than ranking projects against each other.

The Accept-Reject Approach Involves the Ranking of Capital Expenditure Projects