net present value

noun

1. NPV. accounting an assessment of the long-term profitability of a project made by adding together all the revenue it can be expected to achieve over its whole life and deducting all the costs involved, discounting both future costs and revenue at an appropriate rate

Example Sentences

A 2016 study External link by the National Academies of Sciences, Engineering, and Medicine estimated the average immigrant contributes a net present value of $259,000 to federal, state, and local governments.

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As the historian William N. Goetzmann has written, the related idea of net present value "is the most important tool in modern finance."

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The trend hasn’t gone unnoticed by some agents around the industry, especially for deals such as Ohtani’s in which the “net present value” of a contract — essentially, how much a deal with deferrals would be worth if it were paid out in the present day, since money in the future isn’t as valuable because of inflation — is significantly lower than the actual guaranteed total.

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Stock investors who apply fundamental analysis to the positions taken in the market will often encounter net present value calculations when they review financial statements and reports.

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Net present value, often shortened to NPV, is used by accountants and analysts to get a reasonably accurate idea of how much their investments or capital expenditures will be worth.

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