This video shows an example of how calculate the NPV (net present value) of a project.

The NPV of a project is the sum of the project’s discounted cash flows. The NPV is used as part of a decision rule by many companies: if the NPV of a project is greater than zero, the project is accepted, and if the NPV is less than zero the project is rejected. The cash flows of the project are discounted to the present value to account for the time value of money.