Net present value

Competency Group: Business

Type: Measure

Description: This can be used when evaluating the potential financial success of a new product development project. It is one of several scalar measurements which gives an indication of the financial health of a company, and hence what kind of financial risk it can incur whilst paying for the development of new products. In financial terms, the Net Present Value of a continuous cash flow inwards and outwards is defined as the sum of present values of the individual from the same entity.

Citation for DescriptionNet present value. (2011). Retrieved by Wikipedia,

Units: Financial stability in cash terms

Advantages: Necessary measure to make any decision about risk for the future of a project.

Target Audience: Top management

Relevant to Universal Design: No

Stages and Steps: 1.4

Free Resource: Kleczyk, E. (2008). Risk management in development of new products in the pharmaceutical industry. African Journal of Business Management, 2(10), 186-194. Retrieved from

Free Resource: Investopedia. (2011). Net present value calculator. Retrieved from