MathLiveNet present value
Gives the value today of a series of future cash flows discounted at a given rate, with the initial investment entered as a negative cash flow at time zero. Used in capital budgeting to decide whether a project or investment adds value.
NPV = \sum_{t=0}^{n} \frac{C_t}{(1+r)^t}What the symbols mean
| net present value (in currency units) | |
| net cash flow at time period $t$ (in currency units) | |
| discount rate per period (as a decimal) | |
| time period index | |
| total number of periods |
About this formula
- FieldEconomics and finance
- TopicCorporate finance and investment appraisal
- LevelUniversity
- Also calledNPV formula, net present value of cash flows, discounted cash flow, DCF, present value of cash flows, NPV of investment
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