A project has the following cash flows: C₀ = -100,000; C₁ = 50,000; C₂ = 150,000; C₃ = 100,000.If the discount rate changes from 12 percent to 15 percent, what is the change in the NPV of the project (approximately)? A)12,750 increase B)12,750 decrease C)14,240 increase D)14,240 decrease

Question

Quizplus · Accepted Answer

When the discount rate increases, the present value of future cash flows decreases, leading to a decrease in the NPV. The approximate decrease in NPV when the discount rate changes from 12% to 15% is 12,750.

A Project Has the Following Cash Flows: C0 = -100,000;

A Project Has the Following Cash Flows: C₀ = -100,000;