If the investment you’re looking at includes projected cash flows over a number of years, you can use the formula above to discount them. Using the example above, let’s say the discount rate is the federal funds rate of 2.25%. To discount the cash flows from the example above, plug the numbers into the formula: ($6,000/(1+.0225) 1) = $5,867.97 As shown in the analysis above, the net present value for the given cash flows at a discount rate of 10% is equal to $0. This means that with an initial investment of exactly $1,000,000, this series of cash flows will yield exactly 10%. As the required discount rates moves higher than 10%, the investment becomes less valuable. The sum of the discounted cash flows (far right column) is $9,707,166. Therefore, the net present value (NPV) of this project is $6,707,166 after we subtract the $3 million initial investment. Now, let’s analyze Project B: The sum of the discounted cash flows is $9,099,039. Therefore, the net present value (NPV)