Article: Finding the NPVs for multiple investment opportunities allows you to easily compare your investments to determine which are more valuable than others. In general, the investment with the highest NPV is the most valuable because its eventual payout is worth the most in present dollars. Because of this, you'll usually want to pursue the investments with the highest NPVs first (assuming you don't have enough resources to pursue every investment with a positive NPV). For instance, let's say that we have three investment opportunities. One has an NPV of $150, one has an NPV of $45, and one has an NPV of -$10. In this situation, we'd pursue the $150 investment first because it has the greatest NPV. If we have enough resources, we'd pursue the $45 investment second because it's less valuable. We wouldn't pursue the -$10 investment at all because, with a negative NPV, it will make you less money than investing in an alternative with a similar level of risk. Using a slightly modified form of the standard NPV formula, it's possible to quickly determine how much a present sum of money will be worth in the future (or how much a future sum of money is worth in the present). Simply use the formula PV = FV / (1+i)t, where i is your discount rate, t the number of time periods being analyzed, FV is the future money value, and PV is the present value. If you know i, t, and either FV or PV, it's relatively simple to solve for the final variable. For instance, let's say we want to know how much $1,000 will be worth in five years. If we know that, at bare minimum, we can get a return rate of 2% on this money, we'll use 0.02 for i, 5 for t, and 1,000 for PV and solve for FV as follows: 1,000 = FV / (1+0.02)5 1,000 = FV / (1.02)5 1,000 = FV / 1.104 1,000 1.104 = FV = $1,104. The accuracy of any NPV calculation basically depends on the accuracy of the values you use for your discount rate and your future cash inflows. If your discount rate is close to the actual return rate you can get on your money for an alternative investment of similar risk and your future cash inflows are close to the amounts of money you'll actually make from your investment, your NPV calculation will be right on the money.

What is a summary?
Compare investment opportunities by their NPV. Use PV = FV / (1+i)t to find present and future values. Research valuation methods for more accurate NPVs.