Net Present Value

Net present value is the difference between the present value of cash inflows along with the present value of cash outflows. Net present value is used in capital budgeting to analyze the profitability of the investment or project. In finance, the NPV or perhaps net present worth (NPW) is understood to be the sum with the present values (PVs) of incoming and outgoing cash flows over a period. Incoming and outgoing cash flows can be described as help and cost cash flows, respectively.