The answer is net present
value. It is the difference between the present value of cash inflows and the
present value of cash outflows. NPV is used in capital budgeting to examine
the effectiveness of a projected investment or
project. A net present value that is positive stipulates that the
projected earnings produced
by a project or investment surpasses the anticipated costs. In general, an
investment with a positive NPV will be a profitable one and the one with a
negative NPV will result in a net loss.
