Net present value/Definition: Difference between revisions

Revision as of 10:47, 11 April 2009

Citable Version ^[?]

Tutorials ^[?]

A definition or brief description of Net present value.

the sum of the discounted values of the present and future cash flows from an asset (see also discount rate)

@@ Line 1: / Line 1: @@
 <noinclude>{{Subpages}}</noinclude>
-'''Net Present Value (NPV)''' is a time based financial analysis tool used to make capital purchase decisions.
+the sum of the discounted values of the present and future cash flows from an asset (see also ''discount rate'')
-NPV compares the financal return of spending money to make money (e.g. a capital investment) '''WITH''' retaining the money in a no risk interest generating account over time. The purpose of NPV is to determine the best wealth creation opportunity. A positive NPV means spending the money will create more financial wealth than just allowing it to gain interest.