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The Net Present Value of an investment. The measure takes into account the projected future incomes and payments from the investment. The value of the future incomes and payments are reduced by a specified 'discount rate' to allow for the 'time value of money'.
NPV is used to compare the financial benefits of long-term projects that have different cash flows stretching over several years.
The formula is:
Return on Investment. The ROI is a key measure, probably the most important single measure, of the financial performance of an organization. It is defined as:
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