What n.p.v. discounting is?

Suppose you are considering an project.  Now for these projects there are costs & revenues involved.

Now if you estimate that the revenues from this project for the next ten years would be certain amounts say 1lacs, 3lacs, 5lacs so on.  Now the values of these amounts in that respective year would not be the same amount in the current year.  It is the value that you are estimating now that would be in that year.  So for that purpose you are requried to discount that value for the respective year with the discounting factor to find what is it's present value now.

There is an table which provides the discounting factors.  Say if your project would earn an return of about 12% for the next 5 years, then in the table you will have to go the column for 12% & get the discounting factors for the first five eyars.  Then apply that discounting factors to the repective years revenue so that you can get it's present value.  From the cost of the project deduct the discounted cash inflows & you will get the N.P.V which should be positive.