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# Example of a Future Project

For example, consider a four-month future project that has forecast benefits and costs as shown in Example of a Future Project and an annual discount rate of 6%, equivalent to a monthly rate of 0.5% or .005.

Table A-1. Example of NPV calculation
Month | Forecast Benefit | Forecast Cost | Forecast Benefit – Forecast Cost (Forecast Nominal Return)
--- | --- | --- | ---
May 2012 | $100,000 | $90,000 | $10,000
June 2012 | $120,000 | $90,000 | $30,000
July 2012 | $140,000 | $40,000 | $100,000
August 2012 | $140,000 | $5,000 | $135,000

As of March 2012, two months before the project starts, the total NPV is the sum of the following amounts (rounding off to the nearest dollar):

- $10,000 / (1.005) 2 = $9,901 for May

- $30,000 / (1.005) 3 = $29,554 for June

- $100,000 / (1.005) 4 = $98,025 for July

- $135,000 / (1.005) 5 = $131,675 for August

For this example, the total NPV is $269,155.

The total forecast nominal return for the four project months is $275,000.

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