An economic tool that measures the profitability of the project in the future. The net present value is taken from the difference between the present value of cash inflow and the present value of cash outflow. This value compares the value of a project or an investment today to the dollar value in the future as inflation and returns are taken into account. This measures the cash flow and consequently the value of the company in the future. A positive NPV justifies the undertaking of the project as it will be bringing increasing cash value while a negative NPV states otherwise.

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