NPV (Net Present Value): Is the value of an investment calculated as the sum of its initial cost and the present value of expected future cash flows. It is a standard method for using the time value of money to appraise long-term projects. Used for capital budgeting, and widely throughout economics, it measures the excess or shortfall of cash flows, in present value terms, once financing charges are met.

If… It means…

NPV > 0 The investment would add value to the firm. 
NPV < 0 The investment would subtract value from the firm. 
NPV = 0 The investment would neither gain nor lose value for the firm. 

Cost of Capital: Is the rate of return that a business could earn if it chose another investment with equivalent risk-in other words, the opportunity cost of the funds employed as the result of an investment decision. Cost of capital is also calculated using a weighted average of a firm's costs of debt and classes of equity. This is also called the composite cost of capital.

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