At their core, the following two methods of valuation are a net present value calculation.

Discounted Cash Flows

Venture Capital Method

A net present value can be determined from a future value, a compounding rate, and a number of periods compounded.

If an investment were to grow at a fixed rate of return over a given period of time, the following can be determined.

End Value = Beginning Value * (1 + Rate of Return)^(Periods of Time)

A net present value simply takes a look at an expected end value and derives a present value given a rate of return and time periods.

Net Present Value = End Value / (1 + Rate of Return)^(Periods of Time)

Â