Net Present Value (NPV) is a financial metric used to determine the profitability of an investment or project. It calculates the present value of cash inflows and outflows over a specific time period, taking into account the time value of money. The concept behind NPV is that a dollar received in the future is worth less than a dollar received today, due to factors such as inflation and the opportunity cost of capital.
To calculate NPV, the cash flows are discounted back to their present values using a predetermined discount rate or cost of capital. If the NPV is positive, it indicates that the investment is expected to generate a return greater than the discount rate and is considered financially viable. Conversely, if the NPV is negative, it suggests that the investment may not be profitable.
NPV is a widely used financial tool for evaluating investment opportunities and making informed decisions. It helps in determining whether an investment will create value for the company or individual and provides a basis for comparing different investment options.
Total amount: distributed over periods based on the percentages entered. → The total period is 11.35 year
| the money value today for these periods you see below