Net present value (See Chapters 16 and 19 of the Vernimmen) Net present value, or NPV, of a financial security is the difference between present value of this security and its market value; NPV changes in the direction opposite to the change of the discounting rate. In an efficient market, NPVs are zero. NPV can be applied to investment projects also. It represents the value of cash flows linked to the investment discounted (see discounting) at the rate of return required by the market for the level of risk of the investment. Hence, NPV represents the amount of value creation anticipated for this investment. NPV formula runs as follows: n NPV = - V0 + ? Fi/(1 + k)n , i=1 where Fi is the cash flow of each period, V0 - the initial investment, t – discounting rate, n – duration of the investment. Net present value (See Chapters 16 and 19 of the Vernimmen) Net present value, or NPV, of a financial security is the difference between present value of this security and its market value; NPV changes in the direction opposite to the change of the discounting rate. In an efficient market, NPVs are zero. NPV can be applied to investment projects also. It represents the value of cash flows linked to the investment discounted (see discounting) at the rate of return required by the market for the level of risk of the investment. Hence, NPV represents the amount of value creation anticipated for this investment. NPV formula runs as follows: n NPV = - V0 + ? Fi/(1 + k)n , i=1 where Fi is the cash flow of each period, V0 - the initial investment, t – discounting rate, n – duration of the investment. See all terms in the dictionary of finance To know more about it, look at what we have already written on this subject :

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Definitions of terms begining with the same letter as "Net present value" :

NASDAQ NAV NBV NOPAT NOPAT multiple NPV NWP NYSE Natural disaster risks Natural hedge Negative capital employed Negative covenant Negative working capital Net Book Value Net Written Premium Net asset value Net asset value of a fund, NAV

Net assets Net assets per share Net debt Net financial debt Net financial expense/income Net fixed assets Net income Net pension costs Net present value Net profit Net worth Net worth test Netting New equity puzzle Nominal rate Nominal value Nominee agreement

Non core-assets Non investment grade, non-investment grade Non recurrent items Non recurring items Non-monetary items Non-operating assets Non-operating working capital Non-recourse discounting Non-voting shares Normalised cash flow Normalised earnings Normative analysis Normative cash flow Normative margin Notes to the accounts Notional amount Notional pooling