Which of the following would decrease the net present value of a project?
A) A decrease in the income tax rate.
B) A decrease in the initial investment.
C) An increase in the useful life of the project.
D) An increase in the discount rate.

Question

Quizplus · Accepted Answer

Increasing the discount rate will decrease the present value of future cash flows, which in turn will decrease the net present value of a project. A decrease in the income tax rate (choice A) would increase the net present value, while a decrease in the initial investment (choice B) would also increase the net present value. An increase in the useful life of the project (choice C) would not necessarily affect net present value, as it depends on the timing and amount of future cash flows.

Which of the Following Would Decrease the Net Present Value