Which one of the following changes will increase the NPV of a project?
A) A decrease in the discount rate
B) A decrease in the size of the cash inflows
C) An increase in the initial cost of the project
D) A decrease in the number of cash inflows

Question

Quizplus · Accepted Answer

Decreasing the discount rate will increase the present value of future cash inflows, thereby increasing the net present value (NPV) of the project. Option B would decrease the cash inflows, which would reduce the NPV. Option C would increase the initial cost and reduce the NPV, and option D would reduce the number of cash inflows, which would reduce the NPV.

Which One of the Following Changes Will Increase the NPV