Rebates
A partial return of a payment made by a customer for goods or services, effectively acting as a post-purchase discount. It involves paying the full price upfront and then claiming the rebate later by submitting documentation to the issuing organization.
Grants
A sum of money given by a government agency, foundation, corporation, or other organization that does not need to be repaid, unless certain conditions are not met.
Tax Credits
A dollar-for-dollar reduction of the income tax a taxpayer owes. Tax credits are generally more valuable than tax deductions because deductions reduce your taxable income (the amount on which taxes are calculated), whereas credits reduce the final tax bill directly.
Payback Period
The time it takes for an investment to recover its initial cost through its generated cash flows. It is a financial metric used to evaluate the risk and return of an investment by calculating how quickly the initial outlay will be recouped.
Net Present Value (NPV)
A financial calculation that measures the current value of an investment by subtracting the present value of cash outflows from the present value of cash inflows. It accounts for the time value of money, which is the concept that money available today is worth more than the same amount of money in the future due to factors like inflation and earnings potential. Generally speaking, if a project has a positive NPV then it is considered a good investment.
Internal Rate of Return
A metric that represents the projected annual rate of return for an investment, showing the effective compound interest rate that the investment is expected to earn. It is the specific interest rate that makes the NPV of all cash flows equal to zero.