4th December 2019

investopedia
10

What is the formula for calculating NPV?

Net present value (NPV) is a core component of corporate budgeting. The calculation of NPV encompasses many financial topics in one formula: cash flows, the time value of money, the discount rate over the duration of the project (usually WACC), terminal value and salvage value.

Correspondingly, what does NPV tell me?

NPV is the present value (PV) of all the cash flows (with inflows being positive cash flows and outflows being negative), which means that the NPV can be considered a formula for revenues minus costs. If NPV is positive, that means that the value of the revenues (cash inflows) is greater than the costs (cash outflows).

What does NPV mean in financial terms?

net present value
Write Your Answer

Rate

60% people found this answer useful, click to cast your vote.

3 / 5 based on 2 votes.

Bookmark

Press Ctrl + D to add this site to your favorites!

Share