As the opportunity cost of capital increases, the net present value of a project increases.

Name: As the opportunity cost of capital increases, the net present value of a project increases.
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Question

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As the opportunity cost of capital increases, the discount rate used in calculating the net present value also increases. This means that the present value of future cash flows is reduced by a higher percentage, leading to a decrease in the net present value of the project.

As the Opportunity Cost of Capital Increases, the Net Present