Term of the Day: Net Present Value - NPV

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	INVESTOPEDIA Term Of The Day November 9, 2015 Net Present Value - NPV Net Present Value (NPV) is the difference between the present value of cash inflows and the present value of cash outflows. NPV is used in capital budgeting to analyze the profitability of a projected investment or project. A positive net present value indicates that the projected earnings generated by a project or investment (in present dollars) exceeds the anticipated costs (also in present dollars). Generally, an investment with a positive NPV will be a profitable one and one with a negative NPV will result in a net loss. This concept is the basis for the Net Present Value Rule, which dictates that the only investments that should be made are those with positive NPV values. When the investment in question is an acquisition or a merger, one might also use the Discounted Cash Flow (DCF) metric. Apart from the formula itself, net present value can often be calculated using tables, spreadsheets such as Microsoft Excel or Investopedia's own NPV calculator. Breaking It Down: Determining the value of a project is challenging because there are different ways to measure the value of... Read More Related to "Net Present Value - NPV" Days Payable Outstanding Days Payable Outstanding, or DPO, is an accounting measurement showing the average number of days it takes... Read More Liquidity Vs. Solvency Learn about the differences between these two words and how each one is used in... Read More Current Assets Current assets are assets that the company could convert into cash within a year in the normal... Read More Recently Added Definitions Deficit The amount by which a resource falls short of a mark, most often used to describe a difference between... Read More Maintenance Margin Maintenance margin is the minimum amount of equity that must be maintained in... Read More Related Definitions Peer-To-Peer (Virtual Currency) Price-Earnings Ratio - P/E Ratio Debt/Equity Ratio Discounted Cash Flow (DCF) Current Ratio Past Terms of the Day Internal Rate Of Return - IRR International Financial Reporting Standards - IFRS EBITA Earnings Before Interest & Tax - EBIT Days Sales Outstanding - DSO You are currently subscribed as: mondemand.forex@blogger.com Unsubscribe | Manage Subscriptions Investopedia US, A Division of IAC. Copyright © 2015, Investopedia, LLC. All Rights Reserved Follow Us: