What is a 'Net Present Value Rule'
A net present value rule is a rule stating that an investment should be accepted if its net present value is greater than zero and rejected otherwise. According to the theory of net present value (NPV), participating in a positive NPV project will increase firm or shareholder wealth.
BREAKING DOWN 'Net Present Value Rule'
While most firms follow the net present value rule, there are some situations where the theory is abandoned. If the company is pressured by large debt payments, some positive NPV projects will be rejected. In this case, the initial capital will go towards servicing the debt instead of investing in new projects.
If a firm has poor corporate governance, managers may ignore the net present value rule. In order to appear active, management may take on negative NPV projects to give shareholders the illusion of ongoing corporate investment.

Net Present Value  NPV
Net Present Value (NPV) is the difference between the present ... 
Profitability Index Rule
A regulation for evaluating whether to proceed with a project ... 
Adjusted Present Value  APV
The Net Present Value (NPV) of a project if financed solely by ... 
Retained Cash Flow  RCP
A measure of the net change in cash and cash equivalent assets ... 
Net Present Value Of Growth Opportunities ...
A calculation of the net present value of all future cash flows ... 
Capitalization Of Earnings
A method of determining the value of an organization by calculating ...

Fundamental Analysis
Calculating Net Present Value at Different Points Using Excel
Calculating the net present value (NPV) of your investment projects using Excel. 
Professionals
Net Present Value
NPVs reveal exactly how profitable a project will be in comparison to alternatives. 
Professionals
The NPV Profile
CFA Level 1  The NPV Profile. Learn how firms can compare projects using an NPV profile graph. Provides a graphical example of how NPV relates to IRR. 
Professionals
Introduction To Net Present Value And Internal Rate Of Return
These valuation methods will help you make investing decisions. 
Professionals
Net Present Value and the Internal Rate of Return
CFA Level 1  Discounted Cash Flow Applications  Basics 
Professionals
Profitability Index
This index can be used to help you make capital budgeting decisions. 
Investing Basics
Capital Budgeting: Capital Budgeting Decision Tools
Once projects have been identified, management then begins the financial process of determining whether or not the project should be pursued. The three common capital budgeting decision tools ... 
Professionals
Net Present Value (NPV) and the Internal Rate of Return (IRR)
CFA Level 1  Net Present Value (NPV) and the Internal Rate of Return (IRR). Learn how to calculate net present value and internal rate of return. Provides samples highlighting the relationship ... 
Professionals
Net Present Value (NPV)
FINRA/NASAA Series 66 Section 1  Net Present Value. This section discusses the concept of Net Present Value and its calculation. 
Economics
Capital Budgeting: Which is Better, IRR or NPV?
Using internal rate of return and net present value for capital budgeting evaluations often end in the same result. But there are times when using NPV to discount cash flows makes more sense.

Do you discount working capital in net present value (NPV)?
Learn why changes in net working capital (NPV) should be included in net present value calculations for analyzing a project's ... Read Answer >> 
How do you use net present value to calculate a capital budget?
Learn about the net present value calculation (NPV) and how the NPV rule is used in capital budgeting to compare the expected ... Read Answer >> 
What is the formula for calculating net present value (NPV) in Excel?
Understand how net present value is used to estimate the anticipated profitability of projects or investments and how to ... Read Answer >> 
What are the disadvantages of using net present value as an investment criterion?
While net present value (NPV) calculations are useful when you are valuing investment opportunities, the process is by no ... Read Answer >> 
What is the formula for calculating net present value (NPV)?
Learn about the formula for net present value (NPV) and how this calculation is used in capital budgeting to determine which ... Read Answer >> 
Do you include working capital in net present value (NPV)?
Discover why it is important to include changes to working capital as a component in calculating the net present value (NPV) ... Read Answer >>