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Net Present Value (NPV) & DCF

Today's value of future cash flows, discounted for time and risk.

Discounted Cash Flow sums future cash flows divided by (1 + r)ᵗ. A positive NPV means a project creates value at the chosen discount rate. It is the foundation of corporate valuation and capital budgeting.

NPV = Σ_t  CF_t / (1 + r)^t

import numpy_financial as npf
npv = npf.npv(rate=0.10, values=[-1000, 300, 400, 500, 600])

SELECT SUM(cash_flow / POWER(1 + 0.10, period)) AS npv
FROM project_cash_flows;