The method of calculating the net present value of a stream of payments by adding the present discounted values of all net cash flows at various future dates. Let the net receipts (income less cost) at time t be R_t, and the rate of interest be 100r per cent. The present discounted value of net receipts at time t is R_t/(1 + r)^t, and the discounted cash flow is the sum of these values over the entire future, given by

The flow of payments may continue indefinitely, or it may be expected that for t > t*, R_t = 0. Some of the R_t may be negative. For example, if the payments are obtained from an investment project, then this will be the case if construction takes time and there is a running-in period before the project is expected to make a profit. There may also be decommissioning costs at the end of the project.