Net present value (NPV) represents the difference between the present value of cash inflows and outflows over a set time period. Knowing how to calculate net present value can be useful when ...

As mentioned, net present value is not specific to investing in stocks or other securities. Businesses can also use net present value formulas to determine where to allocate their capital.

What's the NPV? NPV stands for net present value, and it is an accounting calculation that every lender makes about each loan that is reviewed for a possible loan modification.