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 Description: Net present value. (2011). Retrieved by Wikipedia, http://en.wikipedia.org/wiki/Net_present_value.

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 http://cdn.intechopen.com/pdfs-wm/17371.pdf

Free Resource: Investopedia. (2011). Net present value calculator. Retrieved from http://www.investopedia.com/calculator/NetPresentValue.aspx#axzz1frtFEvio.