Decision Rule

Designation of a specific condition or combination of conditions that may arise in the decision-making process and the appropriate action to take if the conditions exist. For example, in a Capital Budgeting decision, under the Net Present Value (NPV) Method, a project should be accepted if its NPV is positive. Also, under the Internal Rate of Return (IRR) approach, a project should be accepted if the IRR of the project exceeds the cost of capital.