All else constant, the net present value of a typical investment project increases when:
A)the discount rate increases.
B)each cash inﬂow is delayed by one year.
C)the initial cost of a project increases.
D)the rate of return decreases.
E)all cash inﬂows occur during the last year of a project's life instead of periodically
Throughout the life of the project.

Question

Quizplus · Accepted Answer

The net present value (NPV) of a project increases when the rate of return decreases because a lower discount rate increases the present value of future cash inflows, making the project more attractive.

All Else Constant, the Net Present Value of a Typical