Net present value is a method of discounting future streams of income using an expected rate of return to evaluate the current value of expected earnings. It calculates future value in today’s dollars. NPV may be used to determine the current value of a business being offered for sale or capitalized.

For further reading on small business financials, check out The Key Elements of the Financial Plan, as well as How to Read Your Business’s Balance Sheet, What Is an Income Statement? and How to Forecast Cash Flow.

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Bplans GlossaryBplans Glossary

At Bplans, it's our goal to make it easy for you to start and run your business. Our glossary of common business terms will help you learn about key small business and entrepreneurship topics, to help you plan, fund, and grow your business.