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| - | ====== Net Present Value ====== | ||
| + | ====== Net Present Value (NPV) ====== | ||
| + | In [[capital budgeting]], the Net Present Value is the sum of the discounted future cash flows of an investment. | ||
| + | |||
| + | NPV = - I(0) + I(1)/(1+i) + I(2)/(1+i)² + ... + I(n)/(1+i)^n | ||
| + | |||
| + | Where: | ||
| + | I(0) : Initial Investment | ||
| + | I(1) : Cash flow of the first period. | ||
| + | I(2) : Cash flow of the second period. | ||
| + | I(n) : Cash flow of the nth period. | ||
| + | i : discount rate | ||
| + | |||
| + | |||
| + | See also:\\ | ||
| + | [[How to Calculate the NPV with Excel]]\\ | ||
| + | [[en:internal-rate-of-return-irr|Internal Rate of Return]] | ||