Net Present Value The use of NPV (net present value) appears to be a logical process that is both intuitive and based on an objective assessment, the three stages of estimating the net future cash flows, discounting them and then comparing the result to alternatives in order to make the best decision. The process is one which has many advantages; the process allows comparisons to be made between different types of investments, from financial investment tool to investments in developing new facilities or other projects over different time periods. The same process can be utilized for all of the investment opportunities and give a simple easy to compare with an answer. Different aspects of the project can be managed, for example, the way that the risk is assessed can be accommodated by increasing the required rate of return in the discount rate that is applied with an increased risk premium, and changes in the potential revenues may be undertaken with different calculation that can be weighted according to the potential likelihood. However there are still gaps in what the model can do theoretically and how it is used in practice. The output of the model is a figure that transforms the future revenues streams into a single figure which can be used tom make comparisons. This can be indicative of the second main advantage; that of an easy to understand output that can be used easily. However, there are some current disadvantages with this type of calculation that take away from the intuitive nature of the tool and indicate the presence of gaps. The first is that to use this tool there need to be assumptions, such as a