Will Kenton is an expert on the economy and investing laws and regulations. He previously held senior editorial roles at Investopedia and Kapitall Wire and holds a MA in Economics from The New School ...

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 ...

Suzanne is a content marketer, writer, and fact-checker. She holds a Bachelor of Science in Finance degree from Bridgewater State University and helps develop content strategies. Learn about our ...

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 ...

Definition: The net present value (NPV) of an investment is the present (discounted) value of future cash inflows minus the present value of the investment and any associated future cash outflows.

The net present value (NPV) method can be a very good way to analyze the profitability of an investment in a company, or a new project within a company. But like many methods in finance, it is not the ...

NPV calculates profitability by considering all cash flows and the time value of money. A positive NPV indicates a potentially profitable investment opportunity. NPV's effectiveness relies on accurate ...

Capital budgeting decisions are among the most important decisions a business owner or manager will ever make. Which assets to invest in, which products to develop, which markets to enter, whether to ...

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 ...

Credit: By discounting every future $3,000 cash flow back at a rate of 10%, and subtracting the initial cash outlay of $15,000, we arrive at a net present value of $3,433.70 for this project. Under ...