The net present value is defined as the sum of all the present value cash flows. The NumPy npv() function returns the net present value of cash flows. The function requires two arguments: the rate and an array representing the cash flows.

Read more about the net present value at http://en.wikipedia.org/wiki/Net_present_value. In the formula of the net present value, R t is the cash flow of a time period, r is the discount rate, and t is the index of the time period: