So let's look at an example where we can use the NPV, the net present value calculation to examine two alternative investments and identify which of the investments is actually more advantageous. Here I've got two sheets that are setup stacked with exact same information, 5% interest, 5% interest, negative $100,000 cash flow, and five equal payments of $25,000. Let's suppose for our first investment we spend $100,000 and we're going to receive a $125,000 in return but it's going to come more like this. We get 20,000 here and then 25,000 there. And then over here we're going to get 30,000. All right, and so, we still have, this is still $125,000. Yes it is, okay. Now, down here, it's going to be slightly different. Here, we're going to get our 30,000 up front here and our 20,000 back here. All right. So now even at 5% but look at these two scenarios. First scenario we spend $100,000 and we get cash payments of 20,000, 25,000, 25,000, 25,000, and 30,000. The second scenario is we spend $100,000 and we get cash payments of 30,000, 25,000, 25,000, 25,000, and 20,000. Which one of these investments is better? So without even doing the calculations, I hope you're thinking the second calculation is better. The second idea, the second scenario we're getting $30,000 quicker than we were in the first scenario. That's true. Why do we care about that? We want our money sooner than later. Even if we have really low discount rates we still want stuff sooner than later, so here's the mathematics. The present value for the top, the present value of this net income stream -100,000 and positive 20, 25, 25, 25, and 30 is equal to $7,393. That is the net present value of scenario one is $7,393. Scenario 2, my net present value, it's -100,000 in an income steams of 30, 25, 25, 25, and 20. My net present value is $9,081. Obviously $9,081 is better than $7,393. But the mathematics also shows why this is the case. More of my money sooner brings my net present value higher. So how do we use the NPV? We can look at two or more income streams coming from different investments. Look at the net present value. So we are looking at the positive stream of revenue net of our cash outflow, what it cost for us to get into this investment. And then compare the value. We want to choose the investment that has the higher NPV. Good finance, good decisions.