[Glossary](https://useratio.app/glossary) › Money and tax

# Net present value (NPV)

Today's value of money you will receive later, given a discount rate.

A dollar next year is worth less than a dollar today, so each future amount is divided down by the discount rate for every period it is away. NPV adds the discounted amounts up. A positive NPV on an investment means it earns more than the rate.

Like the spreadsheet function, Ratio discounts every value you list, starting from the first period.

## In Ratio

| You type | Ratio shows |
| --- | --- |
| `npv(10%, 100, 200, 300)` | 481.5928 |

## Related

[Internal rate of return](https://useratio.app/glossary/irr) · [Loan calculator](https://useratio.app/loan-calculator) · [All terms](https://useratio.app/glossary)

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Source: https://useratio.app/glossary/npv