Npv equals net present value of future cash lows . Ie the value...

Npv equals net present value of future cash lows . Ie the value of project in today's value.

The future cashflows must be discounted by an interest rate. The 8 in this case Means 8 percent. The higher the rate , the higher the risk of the project and the lower the net present value. Some companies are using 5 percent.

The other corporate finance term is irr or internal rate of return and this is the interest rate where the net present value becomes zero. The higher the irr the better the project.