Net present value (abbr. NPV) is the difference between the present value of cash inflows and the present value of cash outflows over a period of time.
What is NPV?
According to wikipedia, NPV is also known as NPW (Net Present Worth) and applies to a series of cash flows occurring at different times and depends on the interval of time between now and the future cash flow.
What NPV is used for
- NPV is used to calculate the current value of a future stream of payments from a company, project, or investment to help decision making.
- NPV is used in DCF (Discounted Cash Flow) financial model to analyze the profitability of a projected investment or project. NPV is the result of calculations used to find the current value of a future stream of payments.
How to calculate NPV