I recently viewed a Youtube on Net Present Value (NPV), to gain a better understanding of the concept. Towards the end of the video the uploader makes the claim that the project has added value to the firm, above and beyond the 6% that they could have invested elsewhere.
But that doesn't make sense. If you could have invested the original 10,000 elsewhere at 6% per year you would get 10,000 ( 1 +.06)^5 = $13382.26 for a profit of $3328.26. This is greater than the calculated NPV of $3239 for the project.
I am also confused about how the discount rate is calculated. It seems that once you find a discount rate, it is always better to invest the money elsewhere than to undertake a given project whose cash flow you are discounting. For example in the problem above it makes more sense to invest the money elsewhere at 6% than to invest it in the project.