The Net Present Value (NPV)
is used to compare the financial benefits
of long-term projects that have different
cash flows stretching over several years.
The projected future incomes and outgoings
are converted to today's value using an
assumed 'discount rate' to allow for the
'time value of money'.
The formula is:
The NPV is used in Six
Sigma projects. Another important
financial measures is the ROI.