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What Is Net Present Value?
Formula
NPV calculates the difference between the present value of cash inflows and outflows over a period of time.
A positive NPV means the investment is expected to generate value above the required return.
Common use cases:
- Evaluating capital projects
- Comparing investment alternatives
- Business investment decisions
Frequently Asked Questions
Dr. David Park
Applied Mathematician, PhD Mathematics
David holds a PhD in Applied Mathematics from MIT. He has published research on numerical methods and computational algorithms used in engineering and scientific calculators.
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