Net Present Value (NPV)
Net Present Value (NPV) is the difference between the present value of expected cash inflows and the present value of expected cash outflows for an investment, using a specified discount rate.
Example: A company evaluates a project with an initial outlay of $1.5 million. Expected net cash inflows of $350,000 per year for 5 years, discounted at 10%, yield an NPV of approximately $200,000.
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