Net present Value (NPV) Formula





Io = Initial investment amount


R = Amount of periodic return on investment


i = Interest rate or rate of return


Description:

The difference between an investment’s market value and its cost is called the net present value of the investment

NPV is a measure of how much value is created or added today by undertaking an investment
“An investment is worth undertaking if it creates value for its owners characterized by worth in marketplace being more than what it costs to acquire.”