Analyze a proposed $1 million investment in a new venture called project
First, Forecast the cash flows generated by project X over its economic life. Second, evaluate the appropriate opportunity cost of capital.
this should reflect the both the time value of money and the risk involved in project X. Third, use this opportunity cost of capital to discount the project's future cash flows, the sum of the discount cash flows is called present value(PV), Forth, calculate net present value(NPV) by subtracting the $1million investment from PV.