As the discount rate is increased, the NPV of a specific project will:
A)Increase
B)Decrease
C)Remain constant
D)Decrease to zero, and then remain constant

Question

Quizplus · Accepted Answer

The discount rate, also known as the required rate of return, is the minimum rate of return that an investor expects to earn. As the discount rate increases, the present value of future cash flows decreases, leading to a decrease in the net present value (NPV) of the project. Therefore, the best choice is B, which states that the NPV will decrease as the discount rate is increased.

As the Discount Rate Is Increased, the NPV of a Specific