One method that can be used to increase the NPV of a project is to decrease the:
A) project's payback period.
B) profitability index.
C) time until the receipt of cash inflows.
D)number of project IRRs.

Question

Quizplus · Accepted Answer

The time until receipt of cash inflows affects the net present value (NPV) calculation because the longer it takes to receive cash inflows, the lower the NPV will be due to the time value of money. Therefore, by decreasing the time until receipt of cash inflows, the NPV can be increased. Decreasing the payback period would only affect the payback period itself and not the NPV, while decreasing profitability index and the number of project IRRs would not necessarily increase the NPV.

One Method That Can Be Used to Increase the NPV