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Net Present Value (NPV)

Sum of discounted future cash flows minus initial investment — positive NPV means profitable

NPV (Net Present Value) is the sum of all future cash flows from an investment discounted to present value, minus the initial investment. NPV > 0 means the investment is profitable.

NPV = Σ [CFt ÷ (1+r)^t] − Investment
CFt = cash flow in year t, r = discount rate

NPV > 0 → investment creates value
NPV = 0 → investment returns exactly the required rate
NPV < 0 → investment destroys value

Calculate it yourself

Use the ROI/NPV/IRR calculator.

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