NPV — Net Present Value
Definition: The current value of a series of future cash flows, discounted to account for the time value of money. Positive NPV = invest. Negative = don't.
Example
A $1M investment that returns $300K/yr for 5 years has a positive NPV at most reasonable discount rates — but the math matters.
When you'll hear it
NPV shows up most often in board meetings, quarterly business reviews, and strategy off-sites. When someone uses it, they're usually referring to net present value — and they expect the room to already know what that means.
FAQs
What does NPV stand for?
NPV stands for Net Present Value.
What does NPV mean in business and finance?
The current value of a series of future cash flows, discounted to account for the time value of money. Positive NPV = invest. Negative = don't.
Where will I hear NPV used at work?
NPV comes up most often in board meetings, quarterly business reviews, and strategy off-sites. It's used as shorthand for net present value, so people assume you already know the term.
Related terms
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