NPV (Net Present Value)
Net Present Value (NPV) is a financial tool used in procurement management to help companies make better investment decisions. It measures the potential value of an investment by taking into consideration both its funding costs and expected returns in present-day monetary units. In other words, it helps quantify the amount of financial benefit that could be gained from investing in a particular project or activity. By incorporating the associated costs and benefits into one number, NPV provides an objective way for businesses to compare different investments and determine which ones offer the highest return on investment.
