In the investment report summary, what does Net Present Value mean?
The Net Present Value represents the net increase in the total value of the investment measured in today’s dollars. In other words, it measures the difference in the projected market value of the property (in today’s dollars) less the total cost of that investment (including negative annual cash flows) in today’s dollars. It is a useful index as it is a measure of how much money you are likely to make on the investment given the assumptions you have made. It can always be calculated, even when an IRR can’t (e.g. for positive cash flow properties) so it helps to keep infinite rates of return in perspective. To display the Net Present Value at the bottom of the Investment Analysis spreadsheet, choose it in the Preferences item under the Settings menu.
