Net Present Value Analysis

• Net present value (NPV) calculates the expected net monetary gain or loss from a project by discounting all expected future cash inflows and outflows to the present point in time
• Projects with a positive NPV should be considered if financial value is a key criterion - The higher the NPV, the better

• The Book

• OK, In English now

• Money in your hand now has a higher value in the future than it’s current value now because you can invest it
• If you can invest your money in another project (or investment like stocks or bonds) and make more money than the project being proposed, you should invest in the investment with the highest return