Business Case · PM Glossary

Net Present Value (NPV)

The value today of future cash flows minus the initial investment, using a discount rate. A positive NPV means the project adds value.

Example

At 8%, a project costing $500,000 with returns of $200,000 a year for 4 years has an NPV of about $162,000.

Related terms

• Return on Investment (ROI)
• Internal Rate of Return (IRR)
• Payback Period

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