If a company predicted rate of inflation goes down (deflation),what happens to the net present value (NPV)of their projects?
A)Goes up
B)Unchanged
C)Goes down
D)Positive NPV's go up,negative NPV's go down

Question

Quizplus · Accepted Answer

When the rate of inflation goes down, the value of money increases. Therefore, the discount rate used in calculating the NPV decreases, leading to an increase in NPV.

If a Company Predicted Rate of Inflation Goes Down (Deflation),what