## What is Net Present Value example?

Example: Let us say you can get 10% interest on your money.

So $1,000 now can earn $1,000 x 10% = $100 in a year.

Your $1,000 now becomes $1,100 next year.

So $1,000 now is the same as $1,100 next year (at 10% interest): We say that $1,100 next year has a Present Value of $1,000..

## What is NPV and how it is calculated?

Net present value is a tool of Capital budgeting to analyze the profitability of a project or investment. It is calculated by taking the difference between the present value of cash inflows and present value of cash outflows over a period of time.

## What do you mean by NPV?

Net present valueNet present value (NPV) is the difference between the present value of cash inflows and the present value of cash outflows over a period of time. NPV is used in capital budgeting and investment planning to analyze the profitability of a projected investment or project.

## What is difference between NPV and IRR?

Net present value (NPV) is the difference between the present value of cash inflows and the present value of cash outflows over a period of time. By contrast, the internal rate of return (IRR) is a calculation used to estimate the profitability of potential investments.

## What is a good NPV?

A positive NPV means the investment is worthwhile, an NPV of 0 means the inflows equal the outflows, and a negative NPV means the investment is not good for the investor.