Definitions for

**"Net Present Value"****Related Terms:**Npv, Discounted cash flow, Discounted cash flow analysis, Internal rate of return, Adjusted present value, Terminal value, Dcf, Profitability index, Present value, Irr, Embedded value, Eva, Time value of money, Discounting, Net cash flow, Modified internal rate of return, Economic value added, Valuation reserve, Net realizable value, Capitalization, Acv, Cash-on-cash return, Income capitalization approach, Net book value, Financial management rate of return, Income approach, Salvage value, Net realisable value, Capitalization rate, Accounting rate of return, Revaluation reserve, Book value, Time-weighted rate of return, Current cost accounting, Pre-money valuation, Ffo, Free cash flow, Accrued depreciation, Discount factor, Future value, Valuation, Cash flow, Investment, Current value, Operating cash flow, Ddm, Direct capitalization, Depreciate, Full cash value

NPV. The present value of an investments future net cash flows minus the initial...

the discounted value of the net benefits of use of a resource.

Same as present value, being sure to include (negative) payments as well as (positive) receipts.

The present value of an investment's future net cash flows minus the initial investment.

A financial expression, used in Lifetime Value calculations, where the value of future profits is represented by a single number. For example, the Net Present Value of a subscription promotion campaign which generates profits at the following time: Year 1 = (£1,000); Year 2 = £2,000 and Year 3 = £1,000, and with the bank interest rate at 6% is £1,777. This is less than adding together each annual profit figure (£2,000 in this case) because £1 profit generated in the future is worth less than £1 profit generated now.

or "NPV" is a future stream of benefits and costs converted into equivalent values today. This is done by assigning monetary values to the benefits and costs discounting future benefits and costs using appropriate discount rate and subtracting a sum total of discounted costs from the total at discounted benefits.

NPV - Another name for the present worth, PW.

The sum of the present values of the net cash flows minus the net investment. It is the expected increase in the value of the firm due to an investment in a capital budgeting project.

This measure is used for valuating and ranking alternative investment opportunities. It is defined as the excess of the net cash flows expected from an investment over the amount to be invest.

The present value of the expected future cash having taken account of costs i.e. present value net of costs.

The present value of an investment after taking account of future financial returns, having regard to inflation.

The result of discounting future cash flows to the present by applying an interest rate based on the “Time Value of Money”.

A method of analysis of proposed capital investments that focuses on the present value of the cash flows expected from the investments.

A technique for assessing the worth of future payments by looking at the present value of those future cashflows discounted at today's cost of capital.

The current value of future cash flows discounted back to today's date using a stated discount rate.

Determination of current value of buildings and components in today's dollars that reflects a stream of current and future benefits and costs; projected future costs and benefits must be discounted to give a fair value in today's dollars.

The difference between the sums of the projected discounted cash inflows and outflows attributable to a capital investment or other long-term project.

The net result of combining the discounted cash inflows and the discounted cash outflows of an investment, project, company, etc. To Top

NPV of an investment is the sum of all expected future cash flows from the investment, discounted at spot interest rate or riskless rate, less the cost of investment; one of the best tools to evaluate investment decisions. Projects with a positive NPV can be approved while projects with a negative NPV will not be recommended.

The value, as of a specific date, of future cash inflow less all cash outflow. These are calculated using an appropriate discount rate and include the cost of investment.

The difference between the present value of the cash flows and the amount of equity required to make an investment.

A project's net contribution to wealth- present value of cash flows minus initial investment.

The present value of future cash flows of an investment project, less the present value of the investment's cash flows, where discounted at the cost of capital; a measure of the enhancement of shareholders' wealth arising from investment decisions.

A sophisticated capital budgeting technique; found by subtracting a project's initial investment from the present value of the cash inflows discounted at a rate equal to the firm's cost of capital.

The present value of future cash returns, discounted at the appropriate market interest rate, minus the present value of the cost of the investment.

the current value of net benefits (benefits minus costs) that occur over time. A discount rate is used to reduce future benefits and costs to their present time equivalent.

The difference between the discounted present value of benefits and the discounted present value of costs.

the present value of a stream of benefits minus the present value of a stream of costs.

The discounted value of all cash inflows and outflows from a project or investment.

The future stream of benefits and costs converted into equivalent values today. This is done by assigning monetary values to benefits and costs, discounting future benefits and costs using an appropriate discount rate, and subtracting the sum total of discounted costs from the sum total of discounted benefits. [GAO

The discounted value of all of a property's future cash flows (including the reversion) less the initial cash investment.

The total Cash Values for investments, subsidies, savings, running costs and loan costs (each has an appropriate sign, e.g. + or -).

The equivalent value of an amount in today's dollars, given its value at a specific time in the future. Also known as present value.

The present value of future cash flows expected to be received from a particular investment less the cost of that investment.

The sum of the present values of payments spread over several years.

Discounted value of future cash flow.

A measure of a project's future value in current dollars. Future income and expenses are summed and then discounted using a required rate of return to adjust for the time value of money. Net present value is, theoretically, the best method for evaluating projects.

Total discounted revenue (referred to as “present value of revenues”) less total discounted costs (referred to as “present value of costs”). This method is one of the better financial measures of an investment. The higher the net present value, the more desirable the investment from an economic standpoint. A negative net present value represents the fact that costs were higher than revenue and the investment may not seem desirable in an economic sense.

Method, in which the discount rate is chosen and the answer is a sum of money.

The discounted present value of an investment minus the required initial investment.

A calculation of the present value of expected future cash flows (considering the time value of money) less the associated cost of those cash flows. More simply, the total net profit (or loss) expected over the life of an investment.

The difference between the present value of the cash inflows and the present value of the cash outflows associated with an investment project.

(Also known as NPV.) The cost of a product or system calculated in the present-day currency. Relex Life Cycle Cost (LCC) enables NPV calculations, to determine if a particular cost would be better incurred in the present year, or at a future date when costs may be lower.

Means of evaluating which products offer the lowest cost, taking into account the time value of money for the life of the policy.

Net present value (NPV) analyses are used to compare investment alternatives that occur over multiple years. Present Value requires that all quantifiable benefits and costs are brought back to current day dollar values, so that various alternatives can be compared directly.

The value obtained by discounting all cash outflows and inflows attributable to a capital investment project by a chosen percentage.

The value of an asset, at current prices, from its continued operation and subsequent disposal.

The present value of future cash returns of a project.

The discounted value of all future cash flows minus the initial cash outlay. A net present value greater than or equal to zero is acceptable.

aggregate of future net cash flows discounted back to a common base date, usually the present.

The amount of money which would need to be invested at a commercial interest rate at the beginning of the period of debt repayments such that, with accumulated interest, it would be just adequate to meet all the payments as they fall due.

This is a common financial concept, and a critical component of Minnesota's C-BED tariff, which basically reflects the idea that having a given amount of money today is more valuable than receiving the same amount of money in the future. C-BED requires utilities to determine the net present value of their rate schedule using the standard discount factor that they apply to their other business decisions. That means calculating the expected payments over the life of the contract and applying the discount to find the net present value of the series of payments. The net present value is then divided by the total energy produced over the 20 years, resulting in the “net present value rate” – the present value of every kilowatt-hour the project will produce over its lifetime. C-BED requires that the utility establish a tariff that provides for a rate schedule resulting in a net present value rate of up to 2.7 cents per kilowatt-hour.

An investment evaluation method in which all cash outflows and inflows during the life of the investment are discounted with a discount rate (usually a required rate of return or the current market rate for a similar investment of the same duration).

This is a measure of the overall value of a stream of payments over time. The NPV represents the amount that would need to be invested at a commercial interest rate at the beginning of the payment period, such that, with accumulated interest, it would be adequate to meet all payments as they became due.

The present value of an investment's projected income less the present value of the investment's projected expenses. The net present value also takes into account estimated proceeds from a future sale. For more information, see the "Real Estate Investment Analysis Tools" article in the "Real Estate Investing" section.

is a method used in evaluating investments, whereby the net present value of all cash outflows (such as the cost of the investment) and cash inflows (returns) is calculated using a given discount rate, usually REQUIRED RATE OF RETURN. An investment is acceptable if the NPV is positive. In capital budgeting, the discount rate used is called the HURDLE RATE and is usually equal to the INCREMENTAL COST OF CAPITAL.

The sum of the costs and benefits of a project or activity. Future benefits and costs are discounted to account for interest costs.

a stand's present worth before harvesting once costs associated with its establishment and tending have been subtracted.

Net Present Value is the amount invested today at interest that would have the specified future value.

The value, as of a specified date, of future cash inflows less all cash outflows (including the cost of investment) calculated using an appropriate discount rate.

The difference between the present value of capital outlays and the present value of all future cash flow benefits. If positive, it reflects a return on capital; if negative, not all capital has been returned. It is expressed as a dollar amount.

The sum of the projected cash flows from an investment, with each item discounted from the relevant date of calculation.

The difference between the present value of the expected cash inflows from an investment and the amount of the investment outlay; an investment is acceptable if the net present value is equal to or greater than zero.

Valuing a stream of future cash flows at appropriate (risk-adjusted) discount rates.

The difference between the present value of the benefit stream and the present value of the cost stream for a project. The net present value calculated at the Banks discount rate should be greater than zero for a project to be acceptable.

Net present value is the value obtained by discounting all cash outflows and inflows of a capital investment by a chosen target rate of return or cost of capital

The discounted present value of all revenues associated with an investment minus the discounted present value of all costs. Investments with an NPV equal to or greater than 0 are economically feasible at the investor's discount rate. Also see “Benefit/cost ratio,” “Equal annual equivalent,” and “Internal rate of return.

The present value of the net cash flows that will result from an investment, minus the amount of the original investment. See Interest rate formulae

The current value of a stream of future cash flows, negative or positive.... more on Net present value

NPV tell us how much the property is worth now to the investor. IRR tells us the rate of return if the property is bought at a certain price.

The present value of the expected future cash flows minus the cost.

A method of determining whether expected performance of a proposed investment promises to be adequate.

A firm or project's net contribution to wealth. This is the present value of current and future income streams, minus initial investment.

An approach used in capital budgeting where the present value of cash inflow is subtracted from the present value of cash outflows. NPV compares the value of a dollar today versus the value of that same dollar in the future after taking inflation and return into account.

The value of a stream of cash over time, discounted to a selected "hurdle" rate of interest.

a project or investments contribution to net wealth. The amount produced in today's dollars after discounting future cash flows and deducting all initial costs associated with the investment

The calculation includes hardware costs, software costs, professional service fees, internal staff costs, post-implementation costs and quantified benefits.

Present value of cash inflows minus the present value of cash outflows. Represents the economic profit adjusted for risk and timing.

A method of capital outlay analysis that compares a required investment amount with the present value of resulting net future cash flows discounted at the minimum desired rate of return; a project's net contribution to wealth â€“ present value minus initial investment.

An appraisal method for a lessee when assessing the merits of lease versus cash. The NPV is equal to the present value of a future stream of payments minus the present value of the cost of the investment.

The present value of future cash streams, discounted at an appropriate discount rate, less the present value of the initial cost of the investment.

The current value of a stream of income discounted by a factor (usually inflation) over the period of an investment.

The value of a personal portfolio, product, or investment after depreciation and interest on debt capital are subtracted from operating income. It can also be thought of as the equivalent worth of all cash flows relative to a base point called the present.

The present value of a flow of income discounted by a factor (such as inflation) over the period of an investment.

The present value of the future flow of marginal revenue product generated by capital minus the cost of the capital.

Method used in comparably evaluating investments in very dissimilar projects by discounting the current and projected future cash inflows and outflows back to the present value based on the discount rate, or cost of capital, of the firm.

The value today of an asset to be received in the future, either as a single payment or a series of payments (such as an annuity). The value is considered to be different if received at a later date because of the time value of money.

Net present value usually is employed to evaluate the relative merits of two or more investment alternatives. It is calculated as the sum of the total present value of incremental future cash flows plus the present value of estimated proceeds from sale. Whenever the net present value is greater than zero, an investment opportunity generally is considered to have merit.

Refers to a method used in evaluating investments in which the net present value (NPV) of all cash outflows and cash inflows is calculated using a given discount rate, usually the required rate of return. If the NPV is positive, the investment is acceptable. In capital budgeting, the discount rate used is known as the hurdle rate and this rate is usually equal to the incremental cost of capital.

The current value of a particular investment's net cash flow, less the initial investment. A positive result indicates the investment should be made, otherwise, it should not be made.

The present (discounted) value of future earnings (operating expenses have been deducted from net operating revenues) for a given number of time periods.

The net total of the discounted values of the set or flow of payments and receipts associated with a given project or farm development plan.

Net present value (NPV) is a standard method for financial evaluation of long-term projects. Used for capital budgeting, and widely throughout economics, it measures the excess or shortfall of cash flows, in present value (PV) terms, once financing charges are met.