Which of the following would increase the net present value of a project?
A) increase in the net investment
B) use of straight-line depreciation rather than MACRS
C) decrease in the expected accounts payable
D) decrease in the discount rate

Question

Quizplus · Accepted Answer

Decreasing the discount rate would increase the present value of future cash flows, thus increasing the net present value of the project. Increasing the net investment (A) would decrease the net present value, while using straight-line depreciation (B) rather than MACRS would have no effect on the net present value, and decreasing expected accounts payable (C) may increase cash outflows, reducing net present value.

Which of the Following Would Increase the Net Present Value