Net Present Value (NPV) is the sum of all future cash flows discounted to their present value, minus the initial investment. A positive NPV indicates an investment is expected to create value — a core concept in stock valuation.
An investment requiring $1M upfront that generates $300K annually for 5 years at a 10% discount rate has an NPV of approximately $137K — a positive NPV means the investment creates value.
NPV is the foundation of DCF analysis. In stock valuation, the "investment" is the current stock price, and the NPV concept tells us whether the stock is worth buying at that price.
MiniValuator's DCF calculation is fundamentally a stock valuation NPV computation — discounting all projected free cash flows and terminal value to present, then comparing to the current stock price.
Ready to apply this concept? Try the MiniValuator DCF Calculator — calculate intrinsic value for any US stock in under 60 seconds.
