Spring balances or spring scales measure weight (force) by balancing the force due to gravity against the force on a spring, whereas a balance or pair of scales using a balance beam compares masses by balancing the weight due to the mass of an object against the weight of a known mass or masses.
Net present value (NPV) or net present worth (NPW) is defined as the total present value (PV) of a time series of cash flows. It is a standard method for using the time value of money to appraise long-term projects.
Time Value of Money. Consider for the time value of money -- that is, the future value cash flows -- when making capital investment decisions. The NPV method uses a compound rate of return, or present value interest factor, to discount the future cash flows of investments and account for the time value of money. The PVIF basically converts the value of a projectâs future cash flows into todayâs equivalent value.