Net Present Value (NPV)
NPV is the sum of discounted cash flows (positive and negative) expressed in present-value terms, used to assess whether an investment is expected to create value relative to its cost. It is a core discounted cash flow method for comparing alternatives with different timing of cash flows.
- Where it applies
- Generally, not specific to New York
- When it comes up
- Investment decisioning; valuation; capital allocation
- Property types
- All assets (project, property, portfolio)
In practice
NPV is scale-sensitive (absolute dollars), while IRR is rate-sensitive; institutional IC memos typically present both because they answer different questions.
Read more in the Knowledge Base
- Unit Mix Strategy - Optimizing Studio/1BR/2BR/3BR Allocation for Revenue and DemandLandlords
- Capital Improvement ROI for Rental Properties - When Renovations Increase Achievable RentLandlords
- Unit Turnover Operations: Turn Cost Minimization and the 14-Day Turn ProtocolLandlords
Related terms
Investment Metrics
- Adjusted Funds From Operations (AFFO)
- Cost of Capital
- EBITDAre
- Funds From Operations (FFO)
- Internal Rate of Return (IRR)
- Total Return
General information, not legal, tax or financial advice.