There can be no such things as mortgages, auto loans, or credit cards without PV. PV (along with FV, I/Y, N, and PMT) is an important element in the time value of money, which forms the backbone of finance. The inclusion of the word 'net' denotes the combination of positive and negative values for a figure. The difference between the two is that while PV represents the present value of a sum of money or cash flow, NPV represents the net of all cash inflows and all cash outflows, similar to how the net income of a business after revenue and expenses, or how net benefit is found after evaluating the pros and cons to doing something. NPV is a common metric used in financial analysis and accounting examples include the calculation of capital expenditure or depreciation. It is important to make the distinction between PV and NPV while the former is usually associated with learning broad financial concepts and financial calculators, the latter generally has more practical uses in everyday life. Net Present ValueĪ popular concept in finance is the idea of net present value, more commonly known as NPV. Present Value, or PV, is defined as the value in the present of a sum of money, in contrast to a different value it will have in the future due to it being invested and compound at a certain rate. Related Investment Calculator | Future Value Calculator
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