Net present value will be greater
A) as a fixed set of cash receipts occurs later rather than earlier
B) as the total of the cash receipts, made in same time periods, is smaller
C) for one end-of-year receipt of $1200 than for twelve monthly receipts of $100 each
D) for a 4% discount rate than for a 6% discount rate
E) All of the above are true.

Question

Quizplus · Accepted Answer

Net present value (NPV) is higher when the discount rate is lower because future cash flows are discounted less, resulting in a higher present value. Therefore, an NPV calculated with a 4% discount rate will be greater than one calculated with a 6% discount rate.

Net Present Value Will Be Greater