What is net present value?

<Use the same, or similar wording as shown here (100-150 words)>Net present value is the current value of a future sum of money. It is a standard method to compare the value of money over time (a dollar today is worth more than a dollar tomorrow because of interest and inflation) to assess long-term projects. It is produced by applying an interest rate and an inflation rate (collectively called the "discount rate") to a future sum. The amount and timing of cash flows differ in the two options for producing the <name the asset class> (traditional and P3) and the calculation of net present value accounts for those differences. The net present value of the cost to produce and maintain a facility using the traditional approach is called the Public Sector Comparator, or PSC.