Rich Girl Systems
GlossarySign in
All terms
Finance & Moneyadvanced

Net Present Value

NPV

Definition

The value today of all the future money an investment will bring in, minus what it costs, after adjusting future amounts for the fact that money is worth more now than later.

Why it matters

A positive NPV means an investment is expected to add value, giving you a clear rule for deciding whether a project or purchase is worth it.

Example

A £5,000 piece of kit is expected to generate £7,000 of value in today's money, so its NPV is a positive £2,000.

Related terms

Discounted Cash FlowInternal Rate of ReturnCash FlowROIPayback Period

Learn the language of business - and build the systems behind it.

Rich Girl Systems turns 1168+ founder concepts into a step-by-step programme with daily challenges, XP and your own assistant.

Take the free founder quiz