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Net Present Value is the calculation of the present value of cash inflows minus the present value of cash outflows, where present value defines what will be the worth of the future sum of money as of today. calculation NPV = CF/(1+r)t Cash Outflow. If you are investing in certain investments or projects if it produces positive NPV or NPV>0 then you can accept that project this will show the additional value to your wealth. And in case of negative NPV or NPV<0, you should not accept the project. Advantages of NPV, Time Value of Money is given more importance i.e. the value of money today is more than the value of money received a year from now.Project profitability & risk factors are given high priority.It helps you to maximize your wealth as it will show are your returns greater than its cost of capital or not. It takes into consideration both before & after cash flow over the life span of a project.