ROI is a simple percentage ratio; NPV expresses value created in today's money, accounting for time and the discount rate. NPV is more rigorous for multi-year decisions.

What discount rate should I use?

Usually the company's weighted average cost of capital (WACC) or the return rate required by the board.

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Net Present Value (NPV)

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Category: Financiar · Acronym: NPV

Net Present Value (NPV)

Quick answer: The value today of all an investment's future cash flows, minus the initial cost, discounted at a chosen rate.

Key takeaways

NPV > 0 — the project adds value, worth investing
NPV = 0 — breakeven against the discount rate
NPV < 0 — destroys value at the chosen rate

What NPV is

Net Present Value (NPV) brings all of a project's future cash flows to their value today (using a discount rate) and subtracts the initial investment. A positive NPV means the project creates value.

Why it matters to the board

NPV is the gold standard for evaluating long-term investments because it accounts for the time value of money. A euro saved in 3 years is worth less than one today — NPV captures exactly that.

How to read it

NPV > 0 — the project adds value, worth investing

NPV = 0 — breakeven against the discount rate

NPV < 0 — destroys value at the chosen rate

How Azuvio helps

For a 3-year operational project, NPV is usually strongly positive: low entry cost (no rip-and-replace) and recurring savings flows from automated processing and avoided errors.

Frequently asked

NPV vs ROI?: ROI is a simple percentage ratio; NPV expresses value created in today's money, accounting for time and the discount rate. NPV is more rigorous for multi-year decisions.
What discount rate should I use?: Usually the company's weighted average cost of capital (WACC) or the return rate required by the board.

Where Azuvio fits

Related terms

ROI (Return on Investment) — The metric measuring the net gain of an investment relative to its cost: (benefit − cost) / cost.
Payback period — The time it takes for the savings or gains from an investment to cover its initial cost.
Internal Rate of Return (IRR) — The discount rate at which an investment's net present value (NPV) becomes zero — the project's intrinsic return.
Total Cost of Ownership (TCO) — The sum of all costs of a solution over its full life: acquisition, implementation, operation, maintenance and replacement.

Last updated: 2026-07-06