Presumably, the decision to invest the $100,000 is what creates the opportunity to earn the additional $20K each year. presumably, the 'boss' is somehow either a partner in the business or a cost of the business and buying him out creates an incremental $20,000 in profit to the business, that I guess inures to your benefit. so the discounting of the $20K each year applies to both the $100K that makes the investment possible as well as the 20K each year that the $100K investment creates, so Year 1 is -$100,000 and presumably years 2-8 are +$20,000 and you NPV that to get an NPV of $22,826. You invest $100K to get 20K for 8 years or $160K and the NPV of that series is $22.8 today. Now what is interesting is if in fact you do have the opportunity to earn 6% on your $100K today for eight years, and you do that you'll have about $148K in 8 years. but when you discount that back at 6% is is still worth $100K, i.e. what you have to give up today to get either cash flow stream. so the only way to fairly value the alternatives is to express BOTH options in terms of the Net Present Value, we can only ACT in the present, therefore valuing things in terms of Net Present Value is the correct approach. capiche?