Net present value is a way of measuring future flows of money and comparing them to each other. For instance, which is worth more:
- Getting $100 now
- Getting $200 3 years from now
The answer is, "it depends on your assumptions about interest rates".
In the blog poster's spreadsheet, the "net" line is the cost of owning that car in that year in that year's dollars. The PV is the cost of owning that car in that year in THIS year's dollars (a figure obviously depending on assumptions about interest rates). The NPV line is the cost of owning that car for 8 years in this year's dollars.
- Getting $100 now
- Getting $200 3 years from now
The answer is, "it depends on your assumptions about interest rates".
In the blog poster's spreadsheet, the "net" line is the cost of owning that car in that year in that year's dollars. The PV is the cost of owning that car in that year in THIS year's dollars (a figure obviously depending on assumptions about interest rates). The NPV line is the cost of owning that car for 8 years in this year's dollars.