Net present value (NPV) represents the difference between the present value of cash inflows and outflows over a set time period. Knowing how to calculate net present value can be useful when choosing ...

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 ...

Now I (sort of) understand why so many homeowners are in loan modification hell. This Dante's Housing Crisis Inferno has been fanned by the introduction of a simple calculation: the NPV. What's the ...

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 ...

An even cash flow of regularly scheduled payments defines an annuity. If you borrow money to start your business, the monthly payments are calculated using an annuity formula. Two basic annuity ...

When a company is making capital budgeting decisions -- whether it's something as small as buying a new copier vs. servicing an old one or as big as entering a new market -- it must weigh the expected ...

Julia Kagan is a financial/consumer journalist and former senior editor, personal finance, of Investopedia. Dr. Melody Bell is a personal finance expert, entrepreneur, educator, and researcher. Melody ...