Net present value (NPV) represents the difference between the present value of cash inflows and outflows over a set time period. Knowing how to calculate net present value can be useful when choosing ...

Net present value and the profitability index are helpful tools that allow investors and companies make decisions about where to allocate their money for the best return. Net present value tells us ...

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When a company is making capital budgeting decisions -- whether it's something as small as buying a new copier vs. servicing an old one or as big as entering a new market -- it must weigh the expected ...

Opinions expressed by Entrepreneur contributors are their own. We recently helped a client think through whether or not to invest in new technology to reduce the cost of doing business. Specifically, ...

Small business owners frequently make decisions about how to invest money to increase profitability. Part of being a good business manager is the ability to analyze the income potential of long-term ...

The discount rate refers to the interest rate used when calculating the net present value (NPV) of an investment. It represents the time value of money, which is the concept that a sum of money today ...

Calculate the present value of each year's cash flow by dividing by (1 + discount rate)^number of years. Sum all present values to find the total value of projected cash flows, which in this example ...

Investopedia contributors come from a range of backgrounds, and over 25 years there have been thousands of expert writers and editors who have contributed. Amy is an ACA and the CEO and founder of ...

Present value is a useful mathematical formula designed to figure out if money received now is worth more than money received later. What Is Present Value? Terms Associated With the Present Value of ...

The basic premise of finance is that money has time value -- a dollar in hand today is worth more than a dollar in the future. The study of finance seeks to make it possible to compare the value of a ...