Given a positive discount rate, which one of the following changes would increase the NPV of a project?
A) Increasing the firm's opportunity cost of capital
B) Realizing a net decrease in working capital
C) Spreading the total cash inflows over a longer time interval
D)Increasing the project's estimated expenses

Question

Quizplus · Accepted Answer

A net decrease in working capital would release cash and increase the present value of the project's cash inflows, thereby increasing the NPV.  Increasing opportunity cost of capital (A) would decrease NPV,while spreading total cash inflows over a longer time(interval) (C) would decrease the present value of cash inflows and thus decrease NPV. Increasing estimated expenses (D) would reduce net cash inflows and decrease NPV.

Given a Positive Discount Rate, Which One of the Following