NPV (Net Present Value)

Net Present Value (NPV) is a financial measure used to assess the profitability of a project or investment. It calculates the difference between the current value of expected future cash inflows (money earned) and the initial investment cost. By accounting for the time value of money—meaning money today is worth more than money in the future—NPV helps determine whether an investment is likely to generate a positive return. A positive NPV indicates the project can be profitable; a negative NPV suggests it may result in a loss.