Net present value

Net Present Value (NPV) is a way of deciding if an investment or project is worth doing. To get the NPV, you add up the expected cash flows (money that comes in or goes out) over the course of the project and subtract the initial cost of doing the project. This is like a bank account; the amount of money you have at the end of the project is the NPV. If it's positive (like having money in the bank at the end of the month), then the project is worth doing. If it's negative (like overdrawing your account at the end of the month), then the project isn't worth doing.