Net present value (NPV)
A financial metric used to assess the profitability of an investment by calculating the present value of expected cash flows.
NPV evaluates the profitability of an investment by comparing the present value of cash inflows and outflows. It is crucial for financial planning, investment analysis, and project selection, providing insights into long-term value creation. By considering the time value of money, NPV helps stakeholders assess the financial viability of projects, prioritize investments, and allocate resources effectively, supporting strategic decision-making and sustainable growth.
Used in a sentence
The project's NPV was calculated to determine its financial viability.
Synonyms/variation
Discounted Cash Flow
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