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Net present value rule
Net present value ruleAn investment is worth making if it has a positive NPV. Projects with negative NPVs should be rejected. RELATED TERMS-------------------------------------- Investment The purchase of materials, machines, property, securities, etc. in order to produce income or profits. SIMILAR TERMS-------------------------------------- Net adjusted present value The adjusted present value minus the initial cost of an investment. Net advantage of refunding The net present value of the savings from a refunding. Net advantage to leasing The net present value of entering into a lease financing arrangement rather than borrowing the necessary funds and buying the asset. Net advantage to merging The difference in total post- and pre-merger market value minus the cost of the merger. Net after tax gain Capital gain after income taxes have been paid. Net asset value (NAV) The value of a fund's investments. For a mutual fund, the net asset value per share usually represents the fund's market price, subject to a possible sales or redemption charge. For a closed-end fund, the market price may vary significantly from the net asset value. Net asset value arbitrage For a number of assets, the most recent transaction price at 4PM ET does not fully reflect all available market information. Net assets Fixed assets plus the difference between current assets and liabilities. Net benefit to leverage factor A linear approximation of a number, that enables one to operationalize the total impact of leverage on firm value in the capital market imperfections view of capital structure. Net book value The value of an asset; under historical cost accounting, its purchase price minus accumulated depreciation charges. Net capital requirement SEC requirement that member firms and nonmember securities broker-dealers maintain a maximum ratio of indebtedness to liquid capital of 15 to 1. Net cash balance Beginning cash balance plus cash receipts minus cash disbursements. Net cash flow Operating cash flow + dividends received from associates - dividends paid to minorities or preference shareholders +-(-) interest received-(paid) - tax paid. Net change This is the difference between a day's last trade and the previous day's last trade. NET Credit Union NET is a credit union with head office in SCRANTON, PA Net currency exposure Exposure to foreign exchange risk after netting all intracompany cash flows. Net current assets The difference between current assets and current liabilities, also known as working capital. Net debt Calculated as short- and long-term interest-bearing debt minus cash (and equivalents). Net debt per capita A measurement of the value of a government's debt expressed in terms of the amount attributable to each citizen under the government's jurisdiction. Net debt to assessed valuation In a municipal bond issue, a ratio measuring the value of the municipality's net debt compared to the specified value of the real property being purchased as assessed for tax purposes. Net debt to estimated valuation A ratio comparing the net value of a municipal bond issue to the estimated market value of the property secured by the debt. Net domestic product An annual measure of the economic output of a nation that is adjusted to account for depreciation, calculated by subtracting depreciation from the gross domestic product (GDP). Net errors and omissions In balance of payments accounting, net errors and omissions record the statistical discrepancies that arise in gathering balance of payments data. Net exports The value of a country's total exports minus the value of its total imports. Net exposed assets Exposed assets less exposed liabilities. This term is used with market values or, in translation accounting, with book values. Net financing cost Also called the cost of carry or, simply carry, the difference between the cost of financing the purchase of an asset and the asset's cash yield. Net float Sum of disbursement float and collection float. Net income The company's total earnings, reflecting revenues adjusted for costs of doing business, depreciation, interest, taxes and other expenses. Net interest cost (NIC) The total amount of interest that will be paid on a debt obligation by a corporate or municipal bond issuer. Net interest margin The difference between interest income and interest expenses, divided by average earning assets. Net interest margin securities A type of security that allows holders to access excess cash flows resulting from securitized mortgage loan pools. Net investment Gross, or total investment minus depreciation. Net investment income Income received from investment assets (before taxes) such as bonds, stocks, mutual funds, loans and other investments (less related expenses). Net investment income per share Income received by an investment company from dividends and interest on investments less administrative expenses, divided by the number of outstanding shares. Net lease A lease arrangement under which the lessee is responsible for all property taxes, maintenance expenses, insurance, and other costs associated with keeping the asset in good working condition. Net liquid assets A company's liquid financial assets minus its current liabilities. Net long A condition in which an investor has more long positions than short positions in a given asset, market, portfolio or trading strategy. Net loss The result that occurs when expenses exceed the income produced. Net national product GNP minus an allowance for depreciation. Net operating income A company's operating income after operating expenses are deducted, but before income taxes and interest are deducted. Net operating loss carrybacks The application of losses to offset earnings in previous years. Net operating loss carryforwards Application of losses to offset earnings in future years. Net operating losses Losses that a firm can take advantage of to reduce taxes. Net operating margin The ratio of net operating income to net sales. Net operating profit after tax A company's potential cash earnings if its capitalization were unleveraged (that is, if it had no debt). Net operating profit less adjusted taxes Total operating profits for a firm with adjustments made for taxes. Net parity 1) Convertibles: Price of a convertible security including accrued interest. 2) International: Price of international security including commissions, fees, stamp duty, and other transaction costs, translated into U.S. dollar amounts. Net period The period of time between the end of the discount period and the date payment is due. Net position The value of the position subtracting the initial cost of setting up the position. Net present value (NPV) The present value of the expected future cash flows minus the cost. Net present value of future investments The present value of the total sum of NPVs expected to result from all of the firm's future investments. Net present value of growth opportunities A model valuing a firm in which net present value of new investment opportunities is explicitly examined. Net proceeds Amount received from the sale of an asset after deducting all transaction costs. Net profit The excess of all revenues and gains in a period over all expenses and losses. Net profit after tax The net profits of a company before they are reduced by Corporation Tax. Net profit before tax (pre tax profit) The net profits of a company before they are reduced by Corporation Tax. Net profit margin Net income divided by sales; the amount of each sales dollar left over after all expenses have been paid. Net quick assets Cash, marketable securities, and accounts receivable less current liabilities. Net realizable value The amount that could be raised by selling an asset (less the costs of sale). Net realized capital gains per share Capital gains realized by an investment company minus any capital losses divided by the total number of the company's outstanding shares. Net receivables A company's accounts receivable (money owed to the company) minus bad debts. Net relevant earnings A person's pensionable income (that is, income from employment) plus taxable benefits in kind, less any allowable business expenses but before deduction of personal allowances. Net revenue pledge A provision in a municipal bond issue that requires the issuing municipality to use net revenues (revenues left after expenses) from the project being financed to pay first the debt service costs of the issue. Net sales Gross sales less returns and allowances, freight out, and cash discounts allowed. Net sales transaction Refers to over-the-counter trading. Securities deal in which the quoted prices include commissions (i.e., OTC); looked at another way, the buyer and seller do not pay fees or commissions in addition to the print or quotation prices. Net salvage value The after-tax net cash flow for terminating the project. Net Servicos de Comunicacao, S.A. Net Servicos de Comunicacao, S.A. is a Spanish company listed at Madrid Stock Exchange's Latibex. Its business activity is mass media and advertising. Net short A condition in which an investor has more short positions than long positions in a given asset, market, portfolio or trading strategy. Net tangible assets per share All of a company's assets except patents, trademarks, and other intangible assets minus all liabilities and the par value of preferred stock, divided by the number of shares outstanding. Net transaction A securities transaction in which no commissions or extra fees are paid, such as in an initial public offering. Net transaction exposure Offsetting inflows against outflows in a given currency to determine extent of exposure to risk. Net unrealized appreciation The difference in value between the average cost basis of shares and the current market value of the shares held in a tax-deferred account. Net volume A security's uptick volume minus its downtick volume over a specified period. Net weight The weight of goods being shipped that does not include the weight of wrapping material, container, or other packaging. Net working capital Current assets minus current liabilities. Often simply referred to as working capital. Net worth Common stockholders' equity which consists of common stock, surplus, and retained earnings. Net yield The rate of return on a security minus purchase costs, commissions, or markups. PREVIOUS AND NEXT TERMS-------------------------------------- Net period The period of time between the end of the discount period and the date payment is due. Net position The value of the position subtracting the initial cost of setting up the position. Net present value (NPV) The present value of the expected future cash flows minus the cost. Net present value of future investments The present value of the total sum of NPVs expected to result from all of the firm's future investments. Net present value of growth opportunities A model valuing a firm in which net present value of new investment opportunities is explicitly examined. Net present value rule Net proceeds Amount received from the sale of an asset after deducting all transaction costs. Net profit The excess of all revenues and gains in a period over all expenses and losses. Net profit after tax The net profits of a company before they are reduced by Corporation Tax. Net profit before tax (pre tax profit) The net profits of a company before they are reduced by Corporation Tax. Net profit margin Net income divided by sales; the amount of each sales dollar left over after all expenses have been paid. We thank you for using the Financial Dictionary to search for Net present value rule. If you have a better definition for Net present value rule than the one presented here, please let us know by making use of the suggest a term option. This definition of Net present value rule may be disputed by other professionals. Our attempt is to provide easy definitions on Net present value rule and any other medical topic for the public at large.
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