Net Present Value

Net present value (NPV) is an investment measure used in capital budgeting that denotes whether an investment is achieving a target yield at a given initial investment. Simply put, the Net Present Value is the difference between the present value of cash inflows and the present value of cash outflows. NPV relies on a discount rate that is derived from the invested cost of capital.

If the NPV of an investment is positive, it implies that an investor is paying less than the asset’s worth or a negative NPV means that an investor is paying more than an asset’s worth. On the other hand, a zero NPV denotes that an investor is paying the same amount as that of the worth of the asset.

One drawback of NPV analysis is that it mainly assumes future events that may not always be reliable.

This help page and the information contained herein is provided for informational and discussion purposes only and is not intended to be a recommendation for any investment or other advice of any kind, and shall not constitute or imply any offer to purchase, sell or hold any security or to enter into or engage in any type of transaction.

Investing in venture capital funds is inherently risky and illiquid. It involves a high degree of risk and is suitable only for sophisticated and qualified investors.