← Back to NPV on the model
Executive briefing

Understanding Net Present Value

Shires Energy | Commercial solar financial model

Initial Investment
£0
25-Year Net Benefit
£0
Net Present Value
£0
Internal Rate of Return
-
Payback Period
Never

Understanding the value

NPV stands for Net Present Value. The key word is Net. It means the system has already paid off your initial £0 investment.

When the dashboard calculates an NPV of £0 at a 6.00% discount rate, it means the system pays back the initial CAPEX, pays the 6.00% cost of capital, and then drops an additional £0 of pure, newly created wealth onto your balance sheet in today's money.

To generate this exact amount of wealth sitting passively in an account earning 6.00%, you would need to deposit £0 today.

In short: you are buying an asset for £0 that has a total present value of £0 to the business today. This massive value creation is what drives your - Internal Rate of Return.