Net Present Value (NPV)

The NPV is the difference between the present value of cash inflows and the present value of cash outflows. NPV is used in capital budgeting to analyze the profitability of an investment or project. The formula is: Cash Flowt  / (1 + Discount Rate)t where:

  • Cash Flowt is Savings - Total Cost for Yeart.

  • t represents a number of Year. It ranges from 0 to 6, where 0 corresponds to the Year containing the Project Start date.

  • Discount Rate: This field is available in the Administration workspace, Setup tab, Finance Advanced Attributes popup.