NPV stands for which?

NPV stands for which?

• A. Net Present Value
• B. Net Present Variation
• C. Not Present Value
• D. Net Payment Value

Answer: (A)

Think about valuing money over time. Net Present Value captures the idea that a dollar today is worth more than a dollar later, so to judge an investment you bring all future cash flows back to their present value and compare them to what you invested. Net Present Value is the present value of all expected cash inflows and outflows, discounted at the project’s required rate of return, minus the initial investment. If the NPV is positive, the investment earns more than the cost of capital and adds value to the firm. If it's negative, the project would destroy value, and if it’s zero, it just meets the required return. The term you’re looking for is Net Present Value. The other phrases listed aren’t standard financial terms, so they don’t describe this concept correctly.

Think about valuing money over time. Net Present Value captures the idea that a dollar today is worth more than a dollar later, so to judge an investment you bring all future cash flows back to their present value and compare them to what you invested.

Net Present Value is the present value of all expected cash inflows and outflows, discounted at the project’s required rate of return, minus the initial investment. If the NPV is positive, the investment earns more than the cost of capital and adds value to the firm. If it's negative, the project would destroy value, and if it’s zero, it just meets the required return.

The term you’re looking for is Net Present Value. The other phrases listed aren’t standard financial terms, so they don’t describe this concept correctly.