Calculate the NPV of an investment

Any positive NPV is technically value-creating. Higher NPV = better. Compare NPV across alternatives to pick the best one. NPV depends critically on the discount rate — change the rate and the NPV changes.

Your opportunity cost — what equivalent alternative investments earn. For business investments: cost of capital (8-12%). For personal: expected return on alternative SIPs (10-14%). For risk-free comparison: G-Sec rates (~7%).

Both have uses. NPV gives a rupee amount (clearer for absolute decisions). IRR gives a % rate (easier to compare across opportunities). When they conflict, prefer NPV — it directly measures wealth created.

Yes — and it should change your decision. Negative NPV means the investment returns less than the discount rate. You'd be better off in the alternative. Walk away.

Use real (inflation-adjusted) discount rate if cash flows are real; use nominal discount rate if cash flows are nominal. Don't mix. Most analyses use nominal because most cash flow forecasts are nominal.

Use after-tax cash flows and after-tax discount rate. Pre-tax NPV will overstate the true value-creation. Account for capital gains, depreciation tax shield, and tax on operating cash flows.

Yes. Buy vs rent: NPV the difference in cash flows. SIP vs FD: compare NPVs. Job offer NPV: salary + benefits, discounted. Even car lease vs purchase is an NPV question.

Sum each year's discounted cash flow individually. The formula generalises easily — just don't use the simplified constant-CF version. Real-world projects have lumpy cash flows.