Which of the following changes would be likely to increase the NPV of a project?
A) Increasing the firm's opportunity cost of capital
B) Permitting a net decrease in working capital
C) Spreading the total cash inflows over a longer interval
D) Increasing the project's estimated expenses

Question

Quizplus · Accepted Answer

All other choices would decrease the NPV of the project. Increasing the opportunity cost of capital would lower the present value of future cash flows, spreading the cash inflows over a longer interval would lower the present value of the cash flows, and increasing the project's estimated expenses would decrease the expected cash flows. Permitting a net decrease in working capital would free up cash that can be invested in the project, leading to a higher NPV.

Which of the Following Changes Would Be Likely to Increase