Net Present Value
Version 1.0.0 · Updated 2026-07-28
CORE DEFINITION
Net present value (NPV), also known as net present worth (NPW) is a method for assessing whether future amounts of money are worth more or less than the cost of an investment made today. It is widely used in finance, economics, and project evaluation to judge whether a planned activity is expected to create value. NPV works by converting future cash flows into their “present value,” recognising th
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Net present value (NPV), also known as net present worth (NPW) is a method for assessing whether future amounts of money are worth more or less than the cost of an investment made today. It is widely
Anchor fast decisions
Money has time value; future cash flows are discounted to present value at a discount rate and summed, then subtract the initial investment. NPV > 0 indicates the project adds value. The formula embodies the idea that "a dollar today is worth more than a dollar in the future."
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Source support: Explicit
- en.wikipedia.orghttps://en.wikipedia.org/wiki/Net_present_valueverified
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