// definition
NPV
Net present value
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Short definition
Discounted future cash flows less the initial outlay. It depends on the amounts and timing of cash flows and the chosen discount rate. A positive NPV means the assumed receipts exceed the initial investment in present-value terms; it does not guarantee those receipts will materialise.
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Knowledge map
Intuition
Separate the value of purchases from the income they need to generate.
Formula
NPV = Σ cash_t / (1 + r)^t − initial outlayWhy it matters now
Read imports while separating spending, production and financing.