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World Class Procurement Definitions A forum for defining key terms / definitions as it applies to World Class Procurement and Supply Chain Management

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Old 10-13-2006, 08:44 AM
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Default NPV - Nett Present Value

Following taken from "Odellion Research" but we all work with this regularly in the procurement industry.

The Net Present Value (NPV) of a project or investment is defined as the sum of the present values of the annual cash flows minus the initial investment. The annual cash flows are the Net Benefits (revenues minus costs) generated from the investment during its lifetime. These cash flows are discounted or adjusted by incorporating the uncertainty and time value of money. NPV is one of the most robust financial evaluation tools to estimate the value of an investment.
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