Net present value

Description

In finance, the net present value or net present worth of a time series of cash flows, both incoming and outgoing, is defined as the sum of the present values (PVs) of the individual cash flows of the same entity. Given the (period, cash flow) pairs,where N is the total number of periods, the net present value is the sum of all terms.

Related formulas

Variables

NDVNet present value (dimensionless)
NThe total number of periods (dimensionless)
tThe time of the cash flow (dimensionless)
RtThe net cash flow (dimensionless)
iThe discount rate (dimensionless)