ECONOMICS

Detailed explanation-1: -What Is Net Present Value (NPV)? 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. NPV is used in capital budgeting and investment planning to analyze the profitability of a projected investment or project.

Detailed explanation-2: -The net present value Is calculated by discounting all cash flows to present value and subtracting outflows from inflows. Calculates the rate of return which leaves you indifferent between undertaking the project, and not undertaking the project. Leads to the same decisions as the use of the payback period.

Detailed explanation-3: -Present value is the value right now of some amount of money in the future. For example, if you are promised $110 in one year, the present value is the current value of that $110 today.