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Net present value (NPV)

Definition

Net present value (NPV)

Part of the Business terms glossary:

Net present value (NPV), also called net present worth (NPW), is an approach to evaluating investments that assesses the difference between all the revenue the investment can be expected to achieve over its whole life and all the costs involved, taking inflation into consideration inflation and discounting both future costs and revenue at an appropriate rate. It can be challenging to calculate NPV because it is not always clear what discount rates should be used.

Next Steps

Should I use a combination of IRR, NPV and payback for capital budgeting?
What method -- internal rate of return (IRR), n...
(SearchCRM.com)
internal rate of return (IRR)
Internal rate of return (IRR), also called the ...
(WhatIs.com)

This was last updated in August 2011

Posted by: Margaret Rouse

Related Terms

Definitions

internal rate of return (IRR)
- Internal rate of return (IRR), also called the dollar-weighted rate of return or yield on project, is the interest rate that will bring a series of positive and/or negative cash flows to a net pres... (WhatIs.com)
cost-benefit analysis (CBA)
- Cost-benefit analysis (CBA) is an analytical tool for assessing and the pros and cons of moving forward with a business proposal. (WhatIs.com)

Glossaries

Business terms
- Terms related to business, including definitions about project management and words and phrases about human resources, finance and vertical industries.
Internet applications
- This WhatIs.com glossary contains terms related to Internet applications, including definitions about Software as a Service (SaaS) delivery models and words and phrases about web sites, e-commerce ...

Dig Deeper

Should I use a combination of IRR, NPV and payback for capital budgeting?

What method -- internal rate of return (IRR), net present value (NPV) or payback -- is the best method to use for capital budgeting purposes? Read advice here. (SearchCRM.com)
Net Present Value defined

Net Present Value is a big part of your ROI process, but you need the formula first. (SearchCIO.com)
Calculating risks and measuring return on CRM software with IRR and NPV

Read Tom Pisello's advice on calculating risks and measuring return on CRM, including advice on IRR and NPV in this tip. (SearchCRM.com)

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