For a particular project, other things held constant, an increase in the firm's required rate of return will result in _____.

Question

Quizplus · Accepted Answer

An increase in the firm's required rate of return means that the project needs to generate higher returns to be considered worthwhile. This implies that the project's cash flows are worth comparatively less, leading to a decrease in the project's net present value.

For a Particular Project, Other Things Held Constant, an Increase