The net present value (NPV) method can be a very good way to analyze the profitability of an investment in a company, or a new project within a company.

The net present value (NPV) method can be a very good way to analyze the profitability of an investment in a company, or a new project within a company.

Net present value (NPV) is used to estimate the profitability of projects or investments. You can calculate NPV in two ways using Microsoft Excel.

Though the net present value method is more flexible, it isn't useful when trying to compare projects of different sizes or analyze a project's return timeline.

Raiffa, Howard. "Methods of Calculating Net Present Value and Internal Rate of Return, Programmed Exercises." Harvard Business School Supplement 171-261, December 1970. (Revised May 1991 ...