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 present value, NPV helps investors understand the potential return on an investment in today's terms. A positive NPV indicates that an investment is expected to generate more cash than it costs, making it a desirable option. Conversely, a negative NPV suggests that the investment may not be worthwhile. Investors often use NPV alongside other metrics, such as internal rate of return (IRR) and payback period, to make informed decisions.