Net Present Value, a capital budgeting method that calculates the difference between the present value of cash inflows and outflows over time. A positive NPV indicates that a project or investment will add value to the company.
Acronym combining 'net' (from Latin 'nitidus' meaning clean/clear), 'present' (from Latin 'praesens'), and 'value' (from Latin 'valere' meaning to be strong/worth). The concept formalized in 1950s operations research as companies needed systematic ways to evaluate long-term investments.
NPV is like a financial time machine - it brings all future cash flows back to today's dollars so you can compare apples to apples! A project with NPV of $1 million means it's literally worth $1 million more than it costs, in today's purchasing power.
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