COMPEL Glossary / net-present-value-npv
Net Present Value (NPV)
Net Present Value is a financial calculation that determines the current value of all future cash flows from an AI investment minus the initial cost, using a discount rate that reflects the time value of money and investment risk.
What this means in practice
A positive NPV indicates the investment is expected to generate value above the minimum return threshold. For AI transformation, NPV calculations must account for delayed benefit realization, the J-curve effect, and capability compounding where early investments enable higher returns on later ones. In COMPEL, NPV is part of the business case architecture in Module 3.1, Article 7.
Related Terms
Other glossary terms mentioned in this entry's definition and context.