The initial cash flow(s) of a project will be negative because of the investment.
Why do you need to substract the initial investment in order to calculate NPV?
Doesnt't the initial investment already cancel out with the other positive cash flows? By substracting the initial investment, doesn't it basically mean that you want to recover at least 2 times the initial investment?
Can you please shed some light on this? Thanks.
NPV measures the net present value of the investment, that is, the value of the investment minus the initial outlay. Therefore $0$ is meaningful, as an investment that breaks even under the discounting assumptions.