Which one of the following will decrease the net present value of a project?
A) Increasing the value of each of the project's discounted cash inflows
B) Moving each cash inflow forward one time period, such as from Year 3 to Year 2
C) Decreasing the required discount rate
D) Increasing the project's initial cost at time zero
E) Increasing the amount of the final cash inflow

Question

Which one of the following will decrease the net present value of a project? 
A) Increasing the value of each of the project's discounted cash inflows 
B) Moving each cash inflow forward one time period, such as from Year 3 to Year 2 
C) Decreasing the required discount rate 
D)  Increasing the project's initial cost at time zero
E) Increasing the amount of the final cash inflow

Quizplus · Accepted Answer

Increasing the project's initial cost at time zero will decrease the net present value of the project since it will increase the amount of money needed upfront and therefore decrease the present value of future cash inflows. The other options, such as increasing the value of cash inflows or decreasing the discount rate, will increase the net present value of the project, while moving cash inflows forward or increasing the final cash inflow may not have a significant impact on the net present value.

Which One of the Following Will Decrease the Net Present