Net Present Value (NPV) is a financial metric used to evaluate the profitability of an investment. It calculates the difference between the present value of cash inflows and the present value of cash outflows over a specific period. By discounting future cash flows to their current value, NPV helps investors understand the potential return on an investment. A positive NPV indicates that the projected earnings exceed the costs, making the investment potentially worthwhile. Conversely, a negative NPV suggests that the costs outweigh the benefits, signaling that the investment may not be a good choice.