**Notation**

CF_{0
}= cash flow in time period zero (today); this is usually the cost of the project and is a negative cash flow

CF
_{1, 2, …n }= cash flow in period 1, 2, …n; for "normal" projects (to
be defined later), these are the positive cash flows the project is expected to produce

NPV = Net Present Value

IRR = Internal Rate of Return

k =
required rate of return for the project; this is the firm's WACC if the project is of the same risk level as the firm's overall
level of risk