NPV Law and Legal Definition
When used in the context of banking and finance, ‘NPV’ means net present value. NPV is the net present worth of a time series of both incoming and outgoing cash flows. It simply means the sum of present values. NPV is also known as Net Present Worth (NPW). The term is often seen used in laws relating to banking, taxes, mortgage, and insurance. Pursuant to Alaska Stat. § 43.90.900, ‘net present value’ means the discounted value of a future stream of cash flow.
NPV is a standard method of using time value of money to appraise long term projects. It is mainly used in discounted cash flow analysis.
