Net present value (NPV)
A finance calculation that discounts each future year's net benefit by the organization's cost of capital and subtracts the upfront cost; a positive result means the investment beats keeping the money. Distant and uncertain benefits are discounted hardest, which rewards short payback and conservative projections.
Defined in 3 GAGE programs, which carry 3 distinct definitions of it. The wording above is taught in AI Governance: Applied Mastery.
How each discipline defines it
The same term does different work depending on who is using it. These are the definitions as each program teaches them, unedited.
A financial metric that discounts each future cash flow back to its value in today's dollars using a chosen discount rate, then sums those discounted flows against the initial investment. Accounts for the time value of money, which simple ROI and payback period calculations do not. Used for a fuller comparison when cash flows are spread unevenly across multiple years or when comparing investments with different working lives.
A finance calculation that discounts each future year's net benefit by the organization's cost of capital and subtracts the upfront cost; a positive result means the investment beats keeping the money. Distant and uncertain benefits are discounted hardest, which rewards short payback and conservative projections.
The sum of a project's future cash flows discounted to today's value, minus the initial investment; a positive NPV means the project creates value above the required return. The figure finance reads first.
Where it is taught
The exact lessons this term appears in. The first 7 topics of every program are free with a free account.
- ROI Calculation Tools and Templates · AI in the Workplace and Team Leadership, AI Literacy & Professional Conduct
- The investment memo: one page that survives a CFO · The Money: Budgets, ROI, and Risk, AI Governance: Applied Mastery
Terms it appears with
Not an alphabetical neighbourhood: these are the terms taught in the same lessons, ranked by how often they appear together.