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Net Present Value (NPV)

The net present value (NPV) is also called present value or discounted cash flows. It’s the calculation you can use to find today’s value of a future stream of payments. Net present value is the difference between the present value of cash inflows and the present value of cash outflows over a period of time. Money in the present is worth more than the same amount in the future because of inflation and earnings from alternative investments that could be made during the intervening time.

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